Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — EDUCATION AND SCIENCE

Drug Taking by Schoolchildren

Mr. Gwilym Roberts: asked the Secretary of State for Education and Science if he will initiate regular medical examinations in all schools or a representative sample of schools to detect and curb the use of drugs by schoolchildren.

The Under-Secretary of State for Education and Science (Mr. Denis Howell): No, Sir.

Mr. Roberts: That is a most disappointing Answer. Is my hon. Friend aware that a system of medical inspection would have the effect of encouraging greater collaboration by parents in this very serious matter? Even a sample examination of the sort suggested would have a very considerable deterrent effect on the taking of drugs. Is my hon. Friend aware that at the moment we do not even know the size of the problem?

Mr. Howell: I do not accept that. We know a great deal more about this problem now than we did two years ago. A tremendous amount of health education is being done by the medical officers in my Department. But since it is impossible to make one medical test to discover all known drugs—for example, the smoking of marijuana cannot be detected at all by tests—grave offence would be given to 99·9 per cent. of all school children if they were systematically examined for drug taking when they are good, healthy, wholesome youngsters.

Grammar Schools

Mr. Dudley Smith: asked the Secretary of State for Education and Science

how many grammar schools he estimates will be in operation in the public sector of education by March, 1971; and how many will have disappeared since October, 1964.

The Minister of State, Department of Education and Science (Miss Alice Bacon): Between January, 1965, and January, 1968, the number of maintained grammar schools in England and Wales fell by 130 from 1,285 to 1,155. This trend should increase as the implementation of schemes of comprehensive reorganisation continues, but I cannot estimate a figure for 1971.

Mr. Smith: Is the right hon. Lady aware that many people who support the extension of comprehensive education wish a grammar school element to be maintained in our education system? Is it the intention of her right hon. Friend the Secretary of State that eventually all grammar schools should disappear? If so, what will happen to the children in the top range of ability?

Miss Bacon: The introduction of comprehensive education means that a grammar school type of education will be available for far more children than ever before. If grammar schools exist alongside comprehensive schools, there must be some kind of test to decide who goes to the grammar schools. The whole aim of comprehensive education is to get rid of the segregation of children into different types of school at the age of eleven.

Mr. Christopher Price: Is my right hon. Friend aware that the existence of the voluntary-aided and direct-grant grammar schools is inhibiting the more rapid introduction of comprehensive education? She gave figures for the maintained schools. Could she give figures for the decline in the number of voluntary aided grammar schools?

Miss Bacon: I could not do that without notice. As my hon. Friend knows, the Public Schools Commission is considering, for its second report, the direct grant schools.

Sir E. Boyle: But is it not a great mistake to go to extremes on this question? Would not the right hon. Lady agree that conditions in, say, a suburb or some rural area differ from conditions


in a big city where there are profound educational objections to having nothing but comprehensive schools segregated by neighbourhoods?

Miss Bacon: The alternative is to have selection at the age of eleven. That is the dilemma. Not only we on this side of the House but many Conservative-controlled authorities are anxious to get rid of selection at eleven which means that grammar schools and comprehensive schools cannot exist side by side.

Secondary Education (Parental Choice)

Mr. Boyd-Carpenter: asked the Secretary of State for Education and Science whether it is his policy to seek to provide the maximum of parental choice in secondary education in accordance with the Education Act, 1944.

The Secretary of State for Education and Science (Mr. Edward Short): Yes, Sir. This is why it is the policy of the Government that all secondary school children should be taught in comprehensive schools, which alone can offer a sufficiently wide range of courses to give a meaningful choice to parents.

Mr. Boyd-Carpenter: Does it not follow from that Answer that parental choice of school becomes non-existent if the only pattern of secondary education is that imposed by the right hon. Gentleman regardless of the wishes of local authorities?

Mr. Short: I do not know what the right hon. Gentleman thinks happens at present. Eighty per cent. of children are directed to secondary modern schools. The other 20 per cent. are offered grammar school places. We want all children to go to comprehensive schools so that they may have a course which is tailor-made to their unique pattern of ability.

Mr. J. E. B. Hill: In his Answer, did not the Secretary of State prejudge the whole question of direct-grant schools by saying that all children should go to comprehensive schools? To reiterate the point made from this side of the House, a small proportion of children, particularly those of special ability, might well, with parental choice and guidance, go to specially academic grammar schools without jeopardising comprehensive schools.

Mr. Short: I believe that the segregation of children at the age of eleven is one of the greatest remaining social injustices in this country, and it must be ended as soon as possible.

Mr. Biggs-Davison: Why should segregation necessarily be at the age of eleven and why is the right hon. Gentleman so dogmatic, particularly in view of the Prime Minister's pledge to defend the grammar schools? What consideration has he given to the misgivings of American educationists—for all their experience—about an almost universal comprehensive system?

Mr. Short: I do not know about misgivings on the part of the Americans. Countries throughout the world are following our comprehensive system of reorganisation at the moment.

Engineering Profession (Recruitment of Women)

Sir B. Janner: asked the Secretary of State for Education and Science whether he is aware that in Russia one engineer in three is a woman whereas in Great Britain the comparable figure is one in 500; and what plans he has to improve the situation during the next few years as regards providing facilities for women engineers and encouraging them to enter that profession.

The Minister of State, Department of Education and Science (Mrs. Shirley Williams): I am well aware of these figures. University and further education establishments have places available for women to study engineering, and they welcome applicants. The Government are spending nearly £100,000 a year in publicity to encourage young people to take up engineering, and a "Women in Engineering Year" was launched last month specifically to encourage women to consider this profession.

Sir B. Janner: I thank my hon. Friend for her Answer, but is it not a fact that women in other countries have proved to be extremely efficient in the engineering profession? Cannot she get some kind of propaganda going by means of which girls in secondary schools and universities will come to realise that it is a profession in which they can adapt themselves and be very useful?

Mrs. Williams: I could hardly be a greater ally of my hon. Friend. We


deprecate any suggestion to girls at school that they should drop the science subjects at an early stage, as happens very often in some schools. Secondly, we hope that we shall get the maximum coperation from industry to make places available to women as well as to men.

Colleges of Education (Qualifications of Accepted Candidates)

Mr. J. E. B. Hill: asked the Secretary of State for Education and Science what percentage of accepted candidates for three-year courses at colleges of education had two or more General Certificate of Education A-levels in 1968 and in each of the three preceding years.

Mrs. Shirley Williams: The provisional figure for 1968 is 37·0 per cent. The corresponding percentages for 1965, 1966 and 1967 are 38·2, 37·1 and 36·8, respectively.

Mr. Hill: Is it not desirable if possible to improve that trend, bearing in mind that we want to see a higher proportion of newly-entered teachers completing courses and getting degrees as bachelors of education?

Mrs. Williams: This has been a very steady trend, and those who say that more means worse must face the fact that the proportion of "A" levels in all sections of higher education has been fully maintained, despite the growth in numbers.

School Meals and Milk

Mr. J. E. B. Hill: asked the Secretary of State for Education and Science what is the estimated total expenditure in 1968–69 and 1969–70 on school meals and milk.

Mr. Denis Howell: Net current expenditure on school meals and milk in England and Wales, at constant prices, is estimated at £88·2 million in 1968–69 and £87·6 million in 1969–70.

Mr. Hill: In view of the size of those figures, does the hon. Gentleman not agree that it is desirable to examine in greater detail the causes of food waste with a view to reducing if not eliminating it?

Mr. Howell: There has been a saving of £1·7 million in milk for the half-year. I do not think that the waste arises there.

But as I think the hon. Member knows, we have recently appointed three catering advisers to deal with such matters as the quality of meals and wastage. Their efforts show signs of being welcomed by the local authorities.

Secondary Education (Legislation)

Mr. Lane: asked the Secretary of State for Education and Science whether he will introduce legislation regarding secondary education before the summer adjournment.

Mr. Edward Short: No, Sir, not before the summer adjournment.

Mr. Lane: Will the Minister think long and hard before trying to compel comprehensivisation by Act of Parliament? Will he pay special attention to the wise advice given to us recently by Sir William Alexander that we should avoid making education a political shuttlecock and that further legislation, so far as possible, should be agreed legislation?

Mr. Short: What the hon. Gentleman wishes to maintain is a system which draws a line at the age of eleven—[HON. MEMBERS: "No."]—and divides into two compartments children between whom there is no perceptible difference. If some authorities will not end this voluntarily—and I would prefer it to be done voluntarily—it must be done by this House.

Mr. Raphael Tuck: What steps is my right hon. Friend taking currently to abolish segregation altogether, at any age, and when does he think that it will be achieved?

Mr. Short: The Government have been trying to do it since 1964 on a voluntary basis. We have achieved a great deal of success. Over 100 of the 163 authorities have made progress. Obviously a number of authorities do not intend to make any progress, and I do not intend to allow the children in those authorities to suffer as a result.

Sir E. Boyle: Is it the Minister's intention to present a White Paper or Green Paper to the House before the summer about the proposed legislation? Would it not be quite unprecedented to introduce a controversial Bill making a major


change in the relative responsibilities of central and local government without first doing so?

Mr. Short: I hope that there will be no controversy about the desire to end this great social injustice. This is where the brain drain is, in fact. The real brain drain is not across the Atlantic but in the eleven-plus. I hope that the right hon. Gentleman will support me in this.

Mr. Jennings: If segregation is wrong at the age of eleven, twelve or thirteen, how right is it at the age of eighteen?

Hon. Members: Answer.

Mr. Christopher Price: asked the Secretary of State for Education and Science when he now proposes to introduce legislation to compel local authorities to produce plans for reorganising their schools on comprehensive lines.

Mr. Edward Short: I am not ready to make a statement.

Mr. Price: But is my right hon. Friend aware that the Birmingham Conservatives, by their bigoted, ideological attitude to this problem, are putting at risk school places for secondary school children within the next year or two? In view of that, together with their threat to sue him, does not my right hon. Friend think that he ought to bring in some legislation very soon?

Mr. Short: I will not comment on the threat to sue me. This is a hazard which all Ministers have to endure. I will not comment on the Birmingham position either, but I understand that the position is being reconsidered there and I hope to hear something from the local authority before too long.

Sir E. Boyle: Does the right hon. Gentleman think that it is right or sensible to deny to authorities school-building projects which are badly needed and perfectly consistent with the policy of all parties in this House, on the ground that the authorities concerned will not reorganise or undertake to reorganise their existing schools?

Mr. Short: All I have asked Birmingham for is information about its plans—that seems to make good sense—before I authorise any secondary projects.

Teacher Training

Mr. van Straubenzee: asked the Secretary of State for Education and Science if he will institute an inquiry into the training of teachers.

Mr. Edward Short: I would refer the hon. Member to my reply to my hon. Friend the Member for Eton and Slough (Miss Lestor) on 27th June last.—[Vol. 767, c. 111–2.]

Mr. van Straubenzee: Did not that reply, which I have clearly in mind, show a lack of understanding of the problems arising about the training of teachers? If the right hon. Gentleman is not prepared to reconstitute his National Advisory Council, is this not the obvious subject-matter for the next major inquiry?

Mr. Short: Reconstituting the National Advisory Council is an entirely different question. The hon. Gentleman asked for an inquiry. There have been so many problems recently that it would be a good thing to allow teacher training to settle down for a while.
I should be willing to reconstitute the Advisory Council, but I feel that it would be better to do it in the context of the General Teaching Council which I hope to set up next year.

Secondary Reorganisation (Reading)

Mr. van Straubenzee: asked the Secretary of State for Education and Science whether he will make a statement on his recent discussions with Reading County Borough Council on secondary reorganisation in the borough.

Mr. Edward Short: I have nothing to add to what I told the hon. Member on 30th January. I assume that the authority's working party is still considering the issues involved.—[Vol. 776, c. 1510–11.]

Mr. van Straubenzee: Meanwhile, to assist us, would I be correct in understanding from previous Answers today that, as the law stands, the right hon. Gentleman has no power to enforce upon Reading Borough Council a secondary reorganisàtion plan of which it disapproves?

Mr. Short: I do not quite know the purpose of that question. As I understand it, the Reading Borough Council


has a working party studying this at the moment. I hope that the hon. Gentleman will help it and not hinder it.

All-through Comprehensive Schools

Mr. Silvester: asked the Secretary of State for Education and Science what was the total number of all-through comprehensive schools in England at the latest available date; and what was the total number of mathematics, physics and chemistry graduates in those schools.

Miss Bacon: In January, 1968, there were 441 all-through comprehensive schools in England, compared with 313 a year earlier. In March, 1967, the latest date for which the staffing figures are available, there were in such schools 507 graduates in mathematics; 239 graduates in physics; and 314 graduates in chemistry.

Mr. Silvester: is it not disturbing that the proportion of tuition in these subjects given to fifth, sixth and seventh years, which is given by graduates trained in the subjects, is consistently lower in comprehensive schools than it is in grammar schools? In view of the shortage of the output in these subjects, is not that another reason for regarding the pace of comprehensivisation as being too fast?

Miss Bacon: On the last part of the hon. Gentleman's supplementary Question, I would take the contrary view. The quicker we can get comprehensive schools established, the more we shall get the transfer of science graduates into those schools.

Documents, Manuscripts and Archives (Export)

Mr. Ridley: asked the Secretary of State for Education and Science if he will advise the setting up of a Royal Commission in place of the Departmental inquiry to consider the question of the export of manuscripts, records and documents of all sorts.

Miss Jennie Lee: I would refer my hon. Friend to my reply to my hon. Friend the Member for Ashfield (Mr. Marquand) on 17th April when I sought to make clear that we are not discussing first principles but the difficulties of having a viable, practicable scheme that can be put into operation. For that reason

the Working Party, which is now closely studying the problem, is the best way of going about it.—[Vol. 781, c. 1313–15.]

Mr. Ridley: Will the right hon. Lady accept, first, that this is a totally different problem from the export control of works of art? Secondly, does she agree that it is the precise definition of the criteria which needs attention and that this might be done better by a completely independent outside body than by the proposed inter-Departmental inquiry?

Miss Lee: I do not agree with the hon. Gentleman. We must keep in mind that a document of historical importance for London may not be so for Scotland. We have local and regional historical interests. This is a difficult problem. It is not a matter of first principles. It is a matter of trying to work out a scheme which can be implemented without having to ask civil servants to drop the jobs which they are doing to take over this one.

Capital Expenditure (Devon)

Mr. Emery: asked the Secretary of State for Education and Science what sum of money will be spent as capital expenditure for new buildings or school improvement schemes in the year 1969–70; and what is the project expenditure for 1970–71 and 1971–72 in East Devon.

Mr. Edward Short: The building programme for schools in 1969–70 is fixed at £138·5 million. Work on major projects for new schools at Honiton and Dawlish worth £122,000 is expected to start in 1970–71. No decisions have yet been made for 1971–72.

Mr. Emery: Is the right hon. Gentleman aware that the Devon County Council is extremely aggrieved at the low level of expenditure which is to be allowed in the ensuing two years because it is inadequate and much less than in most other areas in the country?

Mr. Short: I think that it is a reasonably fair settlement. Four schools, or four biggish projects, are starting or planned this year. I went to Devon and had long discussions with the director and the authority and I saw a great many of the schools. In all the circumstances, I think that it is a reasonably fair programme.

Mr. Peter Mills: Will the Minister bear in mind that it is a question of money being spent not only on new buildings but on modernising existing buildings? Will he also bear in mind that in Devon there are some schools where the children are most unhappy to go to the toilets because of the state of the toilets?

Mr. Short: I agree. There are thousands of old schools throughout the country in need of modernisation. It is a pity that the Conservative Party did not do more when they were in office.

Part-time Teachers

Mr. Charles Morrison: asked the Secretary of State for Education and Science how many local education authorities have now informed him of their intention to employ fewer part-time teachers in 1969–70 than they did in 1968–69.

Mr. Edward Short: Local education authorities are not required to inform me when they modify their policies on matters within their discretion, such as the employment of teachers.

Mr. Morrison: Although that may be so, in view of the widespread anxiety felt on this score, would it not be a good idea if the Secretary of State instituted some inquiries? May we conclude from his Answer that he is satisfied with the present situation?

Mr. Short: I collect statistics on this matter. Between October last year and February this year there was an increase of 800 full-time equivalents. That is many more teachers, of course. In February this year the figure was the highest ever—approaching the 20,000 mark. Overall, the position is very satisfactory, although I realise that one or two authorities are cutting down.

Education Priority Areas (Capital Allocation)

Mr. Christopher Price: asked the Secretary of State for Education and Science when a further specific capital allocation for schools in educational priority areas will be announced by his Department.

Mr. Edward Short: I have no specific plans beyond the current £16 million programme.

But in allocating any resources available for the replacement or improvement of old schools I shall continue to give preference to those in educational priority areas.

Mr. Price: While thanking my right hon. Friend for that reply, may I ask whether he agrees that it is a pity that, immediately after the Plowden Report, a specific allocation for educational priority areas which was put into the programme is now not to be continued in that specific form? Is it not important to keep up this concept of the priority area, not just in the immediate years after Plowden but in the years to come?

Mr. Short: I agree with my hon. Friend. If he scrutinises the regional lists which have been published, or the planning list for 1969–70, he will see, first, that the building programme has been bent considerably in the direction of the educational priority areas. Secondly, he will notice that we have authorised the payments to teachers in educational priority areas. Thirdly, he will notice that the first phase of the urban programme has been announced.

Manchester Opera House (Grant)

Mr. Barnett: asked the Secretary of State for Education and Science what grant the Arts Council has made to prevent the closure of Manchester Opera House.

Miss Jennie Lee: The practice of the Arts Council is to consider making a grant in such cases only when requested to do so, and the Manchester local authority has not asked for one.

Mr. Barnett: Does my right hon. Friend agree that it would be deplorable if the rumoured tranformation of the last Opera House in Manchester into a bingo hall were true? Will my right hon. Friend have some consultations with the Manchester authority and others in the area to ensure that that does not happen?

Miss Lee: I entirely agree with my hon. Friend. Indeed, the Secretary-General of the Arts Council has written to the Town Clerk reaffirming the Arts Council's view that it is of great importance that people in Manchester should continue to have the opportunity of enjoying the Royal Ballet, the Sadler's Wells Opera, the National Theatre, the


Royal Shakespeare Company and other companies of real quality. For this reason, the Arts Council intends to continue subsidising these visits within the limits of its resources and to help in many other ways.

University Students (Scientific and Technological Subjects)

Mr. J. H. Osborn: asked the Secretary of State for Education and Science (1) what percentage and numbers of students entering universities in the year commencing October, 1968 are reading scientific, technological, engineering and arts subjects, respectively; and how this position has changed from the previous two years;
(2) what was the total number of places in universities available for scientific, technological and engineering subjects in October, 1968; how many of the places available for new students were taken up in each subject, respectively; and how many places have not been taken up respectively and in total.

Mrs. Shirley Williams: Since the Answer contains a number of figures, I will publish it in the OFFICIAL REPORT.

Mr. Osborn: Is it not a fact that the number of students in universities taking scientific and technological subjects as a percentage of the whole is diminishing? On top of the fact that many places are not being taken up in the universities in these subjects, does not this present the hon. Lady and the Government with

NEW ENTRANTS TO UNIVERSITIES IN GREAT BRITAIN AT UNDERGRADUATE LEVEL




Science
Engineering and Technology
Arts




Number
Percentage of total admissions
Number
Percentage of total admissions
Number
Percentage of total admissions


October, 1966
…
14,748
27·5
9,077
16·9
10,758
20·1


October, 1967
…
16,210
28·4
9,375
16·4
12,119
21·2

Information about admissions in 1968 is not yet available from the University Grants Committee. Figures for 1968 obtained by the Universities Central Council on Admissions, which are not necessarily comparable with those given above, are set out in their Sixth Report and are contrasted in Table 5 of the Report with the universities' estimates of the numbers they could admit.

a problem? What are they going to do about it?

Mrs. Williams: It might, if it were true, but I am glad to say that it is not entirely true. Between 1966 and 1967 the percentage proportion of science places showed a slight increase. The percentage proportion of technological places showed a slight decrease, but less than the increase in science. Although the finalised figures for October, 1968, are not yet available from the U.G.C., there is reason to believe, on the provisional figures, that the pattern is again repeated.
The early indications for October, 1967,—I want to stress that the figures here are sample figures of the earliest admissions—seem to suggest that the trend is changing considerably in the direction of science and technology. I hope that that trend will be confirmed.

Mr. J. E. B. Hill: As this is "Women in Engineering Year", may I ask the Minister what she is doing to encourage more women to become students in engineering and scientific subjects?

Mrs. Williams: The right hon. Gentleman was kind enough not to suggest that I abandon my job and become an engineer, but I take the hint. I should like to stress that we are endeavouring, through project technology and by persuading the universities to broaden their entrance qualifications, to get more girls and boys available to take technological and applied science courses.

Following is the Answer:

C.E.R.N. 300 GeV Accelerator

Mr. Fortescue: asked the Secretary of State for Education and Science whether, in the light of the recent statement by the Chairman of the Science Research Council, he will now make a statement about the possibility of British participation in the 300 GeV nuclear accelerator at C.E.R.N.

Mrs. Shirley Williams: I have nothing to add to the reply my right hon. Friend gave to my hon. Friend the Member for West Lothian (Mr. Dalyell) on 24th October last.—[Vol. 770, c. 328.]

Mr. Fortescue: Is there not every sign here of another first-class administrative muddle? The Chairman of the Science Research Council assumed in a public statement that we are going to join the C.E.R.N. project in two years. The Government say that there is no possibility of this and that, if it happens at all, participation must be put off indefinitely. Could the hon. Lady please give us some more definite statement, if only for the sake of the civil servants working at Nimrod, many of whose jobs will be put in jeopardy if we do join C.E.R.N.?

Mrs. Williams: The Government made a decision and have at no stage since that time changed their decision. However, we accept the freedom of choice of the scientific and academic community to express their own views, and, in a purely domestic lecture, the Chairman of the Science Research Council expressed a view which is well known to the House and which, in this respect, differs from that of the Government.

Youth Service Personnel

Mr. Charles Morrison: asked the Secretary of State for Education and Science what plans he has for in-service training facilities for full-time youth service personnel.

Mr. Denis Howell: The training of full-time youth workers must be looked at as a whole and the starting point is initial training. The Department, in association with the Youth Service Development Council, is at present replanning the provision for initial training and an announcement will be made as soon as possible. This will provide a basis for considering the need for in-service training, the importance of which I recognise.

Mr. Morrison: Will there be anything on this subject in the Report of the Youth Service Development Council which will be published soon, following the work of the Milson and Fairbairn Committees?

Mr. Howell: Yes, the Youth Service Development Council Report on the whole future of the service has a great

deal to say about basic training and subsequent in-service training.

Mr. R. C. Mitchell: Is my hon. Friend aware that some Conservative-controlled local authorities, including my own, have made such drastic cuts in the youth service budget for the forthcoming year as to seriously damage the whole fabric of the youth service and that there will be no one to train if we go on like this?

Mr. Howell: I regret that very much. I said in a recent Adjournment debate that the amount of resources additionally reallocated this year for the youth service and adult education was considerably above the 3½ per cent. for education as a whole.

Post-Graduate Students (Grants)

Mr. Barnett: asked the Secretary of State for Education and Science what guidance he has given to local education authorities about grants for post-graduate students in management and business studies; and if he will make a statement.

Mrs. Shirley Williams: The main responsibility in this field from 1969–70 will lie with the Social Science Research Council, and local authorities are aware of this.

Mr. Barnett: But did my hon. Friend see the report in The Times on 8th April which referred to a cut of 60 per cent. on the 1967–68 figure in the total grant in this field? Is that not deplorable? Should we not be moving to expand our educational facilities in this direction, if only for our long-term economic needs? Rather than leave it to that Council, will my hon. Friend look into this and see that we do not have that sort of cut?

Mrs. Williams: May I make the position absolutely clear, since there has been a good deal of misunderstanding reflected in the Press about this figure? The Department of Education and Science asked the local authorities to give returns of the number of bursaries for management courses. We received a return which showed, for 1967–68, that the number of L.E.A. bursaries in this field was 149. We then made arrangements that the S.S.R.C., when it took these bursaries over, would be able to bring about a minor expansion of the total number of bursaries.
Subsequent to that, the Social Science Research Council made its own survey, inquiring not of the local authorities but of the universities. The figure which it received for the same year was not 149, which we had received from the local authorities, but 266. We are trying—

Mr. Arthur Lewis: On a point of order. Could not this answer be circulated in the OFFICIAL REPORT to save time?

Mrs. Williams: We are trying to find the reasons for this discrepancy and we shall be making a statement to the House shortly, but we are still studying the matter.

Mr. Speaker: Order. In answer to the point of order, long answers mean fewer Questions.

Expenditure

Mr. Roebuck: asked the Secretary of State for Education and Science what was the total spent on education in 1964–65; and what is the estimated figure for 1969–70.

Mr. Edward Short: Actual public expenditure on education in Great Britain, including school meals and milk and local libraries and museums, in 196465 was £1,527 million. I estimate that expenditure in 1969–70 will be £2,322 million, an increase of 52 per cent.

Mr. Roebuck: Is my right hon. Friend aware that that is such a splendid Answer that I am rendered almost speechless. Will he continue to resist the incontinent demands of the brass-faced business men opposite for cuts in public expenditure and see that these facts are driven into the heads of the tiny minority of congenital belly-achers on this side of the House?

Mr. Short: If it left my hon. Friend speechless, it must have been quite an Answer. The incontinence of the Conservative Party is well known, of course. As in most other spheres, this is part of the excellent record of this Government, which must be maintained.

Sir E. Boyle: Will the right hon. Gentleman remind his hon. Friend, when he is in a mood to listen, that the primary school population alone has risen by

half a million since 1964? Is it not obvious that this component of expenditure is no more the consequence of anything done by the present Government than, for different reasons, it was due to myself?

Mr. Short: I am not sure what that means. However, what the present situation means is that under this Government there has been a massive shift of resources from other areas of spending to education, and, for the first time ever in our history, we are spending more on education than on defence this year.

School Building (Expenditure)

Mr. Roebuck: asked the Secretary of State for Education and Science what was the sum spent on school building in 1964–65; and what is the estimated figure for 1970–71.

Miss Bacon: The allocations for school-building projects, including those for special school, announced for 1964–65 totalled £85 million. The corresponding figure for 1970–71 is £160·5 million. I take it that my hon. Friend will now be quite speechless.

Mr. Roebuck: Is my right hon. Friend aware that this is another election promise on its way to fulfilment? Can she exert any influence on local authorities when they build these schools so that the whole community may gain the benefit of the capital expenditure and the schools are not used only from nine o'clock to four o'clock during the school year?

Miss Bacon: This is a very important point, which we are trying to impress on local authorities. We hope that they will take that course.

Sir E. Boyle: Will the right hon. Lady state the corresponding figures for school improvements? Was it not the President of the Board of Trade who said that that was the important element which gave us the true measure of our priorities?

Miss Bacon: I had not the separate figures for the improvements for new school buildings, but, on minor works, which means the improvement of older buildings, the figure for 1964–65 was £18 million and for 1970–71 it will be £30 million.

South African Cricket Tour

Mr. Winnick: asked the Secretary of State for Education and Science what further negotiations have taken place with the Marylebone Cricket Club over the proposed South African cricket test tour next year.

Mr. Denis Howell: Visits to this country by sports teams from overseas are a matter for their hosts, the governing body of the Sport in England, in this instance the newly-created M.C.C. Council. In the case of a South African cricket team, there would be no question of any grant from Government funds, and whilst I am naturally available to any governing body which may wish to consult me, sporting visitors are in the same category as all other visitors from that country.

Mr. Winnick: Would it not be absolutely disgraceful if, following the disclosures over the d'Oliviera affair, the South African cricket team came here to play in Britain next year? Is my hon. Friend aware that many of us consider that the advice which was given by the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) to the M.C.C. was deplorable and unworthy of anyone in his position in public life?

Mr. Howell: I have made it clear many times that I deprecate the choice of teams on any racial basis, and there is no question of money being given for tours here or for British teams to tour in South Africa while apartheid remains. But it is purely a matter for the sports concerned whether these ethical and moral questions should be implemented in the manner which many hon. Members would like.

Captain W. Elliot: Would the hon. Gentleman not agree that contacts between nationals of different nations is one way of moderating attitudes and that this has been particularly borne out by the moderation of attitudes between the West and Russia since the last World War? Is it not juvenile to cut off these contacts and to ostracise another country, which is merely self-defeating?

Mr. Howell: I am aware that there is a genuine feeling among many sporting folk that the considerations which the

hon. Gentleman has in mind are true, but, in my view, there is absolutely no evidence that the continuing contacts in South Africa are having any beneficial and civilising effects on the Administration there.

Women Medical Students

Dame Irene Ward: asked the Secretary of State for Education and Science if he will give an assurance that in the provision of extra places for medical training women will have equal opportunities with men for entry and that merit shall be the only qualification, without sex discrimination.

Mrs. Shirley Williams: I would refer the hon. Lady to my Answer to my hon. Friend the Member for Wolverhampton, East (Mrs. Renée Short), on 17th April. I am sure that universities, which are responsible for their own decisions on the admission of students, will bear in mind the advice of the Royal Commission on Medical Education on this matter.—[Vol. 781, c. 1313.]

Dame Irene Ward: That Answer was a little difficult to follow having regard to the fact that when the conversation on the expansion of medical training took place last week, which was after 17th April, it was stated that the Question ought to be put to the Secretary of State for Education. I am presumably right in assuming that there will be no sex discrimination. I trust that this opportunity will be available for all medical entrants, covering the whole field and not just a new extension? Perhaps I could have an answer to the question, is that correct?

Mrs. Williams: The hon. Lady does not seem quite to appreciate that universities in this country are autonomous. We can only advise them, as we have done, to exercise no sex discrimination. We cannot dictate to them that they should exercise no sex discrimination.

Public Lending Rights Scheme

Mr. Ridley: asked the Secretary of State for Education and Science what progress has been made in his consideration of a scheme of public lending rights for public libraries, based on a charge for each book borrowed.

Miss Jennie Lee: A Departmental Working Party is reviewing various possibilities and, in particular, the Arts Council's proposals, but none which involves a charge on borrowers.

Mr. Ridley: Since the right hon. Lady said earlier that she could not find the £2 million of public money involved in this scheme and since a penny on borrowing would yield £2½ million, why does she not put the cost of the scheme on to those who benefit from it, the readers, rather than on the taxpayers, who do not?

Miss Lee: I know that a few hon. Members opposite look with favour on a small charge for borrowing, but I hope there will not be many who do so because we must rule out entirely the idea that we should breach the principle of a free library service. [HON. MEMBERS: "Why?"] There are all kinds of people, old and young, who are attracted by books, even though they may not all be first-class literature. This is a gain which we have. While we are grateful to the Arts Council for putting forward a scheme acceptable both to authors and publishers, it is not acceptable to many local library associations or to the Association of Municipal Corporations. We are working on various schemes and we hope to bring the various interested parties closely together.

Mr. Ogden: Would there not be an acceptable medium whereby local authorities could make a contribution from rates to pay those authors whose books are loaned through local libraries, thus maintaining the principle of a free library to those who want to use it while at the same time making a proper contribution for those who write the books?

Miss Lee: I am sure that the Working Party will listen to anything that is said by hon. Members and will consider it. The Working Party is also considering other schemes which may raise funds, but not from rates or taxes.

Mr. Channon: Can the right hon. Lady say when we are likely to see the Report of the Working Party, which seems to be taking a long time? Has she seen reports about the alarming situation in Sweden where authors are taking militant action, which we do not want to see happening here?

Miss Lee: In Government everything is a matter of priorities. The £2 million which it is reckoned would be the cost of the Arts Council scheme would not in any circumstances be found from the Arts Council grant. This must be additional Treasury expenditure and, as additional Treasury expenditure, it is a matter of Government priority.

Temporary Playgroups

Mr. Judd: asked the Secretary of State for Education and Science how many temporary playgroups for younger schoolchildren he estimates were organised by educational authorities in England and Wales during the recent school holidays.

Miss Bacon: Arrangements of this kind are within the discretion of local education authorities and I have no returns on which to base an estimate. I think it is a very worth while form of activity.

Mr. Judd: Is my right hon. Friend aware that projects of this kind can make a very significant contribution to the social life of deprived areas of major urban centres? Has she studied the very successful experiment in Portsmouth? Will she encourage all local authorities wherever possible to take similar action?

Miss Bacon: Yes I shall certainly encourage local authorities and I will go a step further. I am willing to consider proposals made under the urban programmes for areas of special social need.

Museums and Art Galleries

Mr. Judd: asked the Secretary of State for Education and Science how many of the largest twenty local authorities in England and Wales have no municipal museums or art galleries; and whether he will make a statement.

Miss Jennie Lee: Excluding the Greater London area where there are special circumstances affecting the pattern of museum provision, only Cardiff of the twenty largest municipal authorities in England and Wales has no museum or art gallery provided or maintained by the local authority. The National Museum of Wales is in Cardiff and this is assisted financially by the City Council. It is for each local authority authorised to provide museums or art


galleries to decide whether and to what extent to do so.

Mr. Judd: Does not my right hon. Friend agree that in comparison with other European countries our provincial centres are sadly lacking in the standard of these amenities? What can be done to improve these facilities?

Miss Lee: I should like to see standards improved, and they are improving. Total expenditure by local authorities on museums and art galleries in 1967–68 amounted to £3·9 million, an increase of 13 per cent. over the previous year. The Government made a grant of £100,000 towards the cost of purchasing objects for display in those museums and galleries. The area museum councils are also being helped. We are anxious to improve standards.

Primary Schools (Norfolk)

Dr. Gray: asked the Secretary of State for Education and Science if he will make a statement on his visit to the Norfolk primary schools; and what proposals he now has for the improvement of the buildings.

Mr. Edward Short: I saw much of interest during the visit, which covered secondary schools and a technical college as well as primary schools. I am authorising four new primary schools in areas of growing population in the county.

Dr. Gray: As there was criticism by the East Anglian Planning Council of the environmental circumstances of these primary schools, does not my right hon. Friend think that something should be done to raise the standard of primary schools in Great Yarmouth and Norwich and to think of the whole of Norfolk as a priority area?

Mr. Short: I could not judge about the criticism by the Planning Council, but from the schools which I saw there was certainly nothing to justify the criticism made in the Planning Council's report.

Oral Answers to Questions — PRIME MINISTER (SPEECH)

Mr. Hugh Jenkins: asked the Prime Minister whether he will place in the Library a copy of his public speech

on industrial affairs at Prescot on 14th March.

The Prime Minister (Mr. Harold Wilson): As my hon. Friend will be aware from my replies to Questions by my hon. Friend the Member for Bedfordshire, South (Mr. Gwilym Roberts) 24th March, and the hon. Member for South Angus (Mr. Bruce-Gardyne) on 15th April, I have already done so, Sir.—[Vol. 780, c. 223; Vol. 781, c. 985–990.]

Mr. Hugh Jenkins: Is my right hon. Friend aware that I am grateful that he has carried out this suggestion because on reading the full text of the speech I found that it did not quite carry the antitrade union impression made by Press reports?

Dr. Winstanley: Will the Prime Minister bear in mind that if he listened to speeches in the North-West of England instead of making them his Government's Industrial Relations Bill might bear a closer relationship to the facts of industrial life than seems likely to be the case?

The Prime Minister: I spent a great deal of time last week listening not only to speeches but to views of people in the Manchester area and other parts of the North-West. I do not think the Bill is yet available to the hon. Member because it is not yet drafted. I returned convinced that the proposals of my right hon. Friend bear full relation to what is required and to reality.

Oral Answers to Questions — MONEY SUPPLY (CONTROL)

Mr. Bruce-Gardyne: asked the Prime Minister if he will take steps to improve co-ordination between the Secretary of State for Scotland and the Minister of Housing and Local Government on the one hand, and the Chancellor of the Exchequer on the other, regarding the control of the money supply.

The Prime Minister: I am not sure in what sense the hon. Gentleman is using the phrase "money supply" and no doubt he will make that clear in any supplementary question.
My right hon. Friends already work closely together on the financing of public sector transactions.

Mr. Bruce-Gardyne: I am sorry if my Question was not clear. The point which I had in mind was subsidisation of local authority borrowing rates by the taxpayer. How does the Prime Minister reconcile that with the Chancellor's attempts to get better control of money supply? How does he explain this contrasting policy to Mr. Goode of the International Monetary Fund?

The Prime Minister: This has been the policy for some years, and the hon. Member was probably involved in debates in this House in relation to the lowering of the effective interest rates which local authorities have to pay. I should have thought that he would agree that this is an extremely valuable contribution to housing problems whether in Scotland or in England and Wales. I do not think that it in any way interferes with the Chancellor's general policies in relation to monetary control and in relation to money supply, on which he had quite a lot to say in his Budget speech.

Mr. John Fraser: Is my right hon. Friend aware of the stringent controls placed by the Chancellor on the supply of money to local authorities for house-purchase schemes and the supply of money to housing societies? As personal consumption on housing is preferable to that on consumer goods, because it involves a lower import input, will my right hon. Friend consider what he can do to increase the supply of money for this purpose in the national interest?

The Prime Minister: My hon. Friend will be aware of the decisions announced by the Government in relation to public expenditure. This was one item on which restraint had to be asked for. At the same time, the Government have given full support to local authorities in building houses for rent where there is still a very large problem.

Oral Answers to Questions — PRICES AND INCOMES BOARD'S REPORT (TOP SALARIES)

Mr. Boyd-Carpenter: asked the Prime Minister whether he will issue directions to the Ministers concerned with the implementation of the report of the National Board for Prices and Incomes on the salaries of chairmen and members of nationalised boards.

The Prime Minister: I would refer the right hon. Gentleman to the statement which my right hon. Friend, the First Secretary of State made in the House on 3rd April.—[Vol. 781, c. 659–61.]

Mr. Boyd-Carpenter: How does the right hon. Gentleman propose to tighten up the disparity between the board salaries covered by that statement and the salaries being paid to member; of the Steel Corporation in view of the effect of this disparity on the remuneration of crucial higher management of the nationalised industries? Will he say what he proposes to do about it?

The Prime Minister: The hon. Gentleman will be aware that the Report did not deal specifically with the British Steel Corporation. He will also be aware that the question of the salary of the present Chairman of the British Steel Corporation, whose original term of employment comes to an end later this month, was explained to the House by my right hon. Friend the Minister of Power on 15th March, 1967. In reply to the right hon. Gentleman's earlier point about the Report of the National Board for Prices and Incomes, this was the subject of debate in the House, I think during the Adjournment debates before the Easter Recess.

Mr. William Hamilton: Will my right hon. Friend confirm that Lord Melchett will get the £8,000 or £9,000 increase in salary for which he has asked? Since the recommendations of the National Board for Prices and Incomes will be implemented, will my right hon. Friend say whether the chairmen of the boards will be worse off if they lose their expenses allowances?

The Prime Minister: I cannot confirm any rumours or suggestions about what the salary of the Chairman of the British Steel Corporation will be, but a statement to the House will be made as soon as the responsible Minister is in a position to do so. I have nothing to add to what my right hon. Friend said in the debate about the Report of the National Board for Prices and Incomes on the wider question raised by my hon. Friend.

Mr. Peyton: On reflection, does the Prime Minister agree that it is hard to see who is being helped, or what useful


purpose is being served, by referring this admittedly difficult matter to the National Board for Prices and Incomes?

The Prime Minister: I assume that the hon. Gentleman, who has some experience in this matter, having been a junior Minister in a Department dealing with certain nationalised boards, has not had time to study in full the Report of the National Board for Prices and Incomes. It was important to get these matters fully studied and certain declarations or suggestions made by the Board. The Government's policy on this was explained by my right hon. Friend in a statement in the House before Easter, and debated shortly afterwards.

Mr. Atkinson: Is my right hon. Friend aware that Lord Robens receives a larger salary than the Prime Minister, and does he think that that is right? Secondly, if the justification for increasing the salaries of the chairmen of nationalised industries is to maintain the differentials of lower grades, are the Government saying that existing differentials should be maintained, whatever the cost, for senior grades?

The Prime Minister: The National Board for Prices and Incomes dealt with the issues in the Report, including the problem of manning up national boards when there was a competing and very high income pull from private industry. I do not think that Lord Robens has considered being lured away from the Board by whatever he may consider to be the attractions of my position. I do not think that that arises.

Oral Answers to Questions — POSTMASTER-GENERAL (SPEECH)

Mr. Bruce-Gardyne: asked the Prime Minister whether the public speech of the Postmaster-General in London on 26th March about the state of the balance of payments represents the policy of Her Majesty's Government.

Mr. Maurice Macmillan: asked the Prime Minister whether the public speech of the Postmaster-General in London on 26th March, 1969, on the state of the economy represents the policy of Her Majesty's Government.

Mr. Waddington: asked the Prime Minister whether the public speech made by the Postmaster-General to the Electronics Engineering Association in London on the 26th March on the state of the economy represents Government policy.

Mr. St. John-Stevas: asked the Prime Minister whether the public speech of the Postmaster-General in London to the Electronic Engineering Association on 26th March, 1969, on the economic situation represents the policy of Her Majesty's Government.

The Prime Minister: I would refer the hon. Members to the reply given on my behalf by my right hon. Friend the Foreign and Commonwealth Secretary to a Question by my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) on 1st April.—[Vol. 781, c. 85.]

Mr. Bruce-Gardyne: Will the Prime Minister tell us why the Postmaster-General got into such hot water on this occasion for telling the truth about the state of the balance of payments, or are all Ministers, apart from the Chancellor, required to subscribe to the Prime Minister's own fancy about an economic miracle?

The Prime Minister: That raises a number of questions with which I should like to deal. First, my right hon. Friend got into hot water only in the more imaginative sections of the Press. My right hon. Friend, having heard what he thought were several rather complacent speeches about the economy at the business lunch which he was addressing, felt it right to put them in perspective. He spoke fully on the lines on which my right hon. Friend and I have spoken, and he used the word "critical" quite rightly in the sense of a turning point. This country economically is facing a turning point, and the House spent four days last week debating that. It was a very interesting debate.

Mr. St. John-Stevas: Is not the truth of the matter that the Prime Minister has long been intoxicated by his own natural but excessive optimism over the state of the economy, and would not it be for the good of us all, if not of his party, if for once he would admit that he had been wrong?

The Prime Minister: The hon. Gentleman has suggested a state of inebriation about the economy. I have repeatedly in many speeches warned the nation and the House about the problems which we face, particularly in relation to exports. I also warned my own party that, because we have done so much to restructure industry, we intend to get the fruits of that, and of that economic miracle which others have talked about, and not leave the fruits to right hon. Gentlemen who have not earned them.

Mr. Dobson: Is the Prime Minister aware that many hon. Members on the benches behind me feel that he would be well advised to answer these questions by informing the House of the massive contributions to the electronics industry which the Government have made, including the restructuring of the industry and the Government contracts which have been placed, and also of the excellent research which has been done?

The Prime Minister: This would be very apposite. If I thought that hon. Gentlemen opposite were interested in real facts, I could, with the help of my right hon. Friend, on a suitable occasion give some very important figures to the House about the remarkable growth of productivity in the publicly-owned industry which my right hon. Friend was defending at the luncheon, and about the remarkable increase in investment, particularly in the telephone service, for which the Government have been responsible and for which we have had to find the money.

Oral Answers to Questions — NIGERIA (PRIME MINISTER'S VISIT)

Sir C. Mott-Radclyffe: asked the Prime Minister whether he will state the number of officials and other staff that accompanied him at public expense on his recent visit to Nigeria; and if he will state the total cost of the visit.

The Prime Minister: There were 20 advisers and officials, including Lord Hunt and Mr. Macolm MacDonald, and 33 other staff concerned with secretarial administration and security duties.
It is not yet possible to give firm figures for the total cost of the visit but the estimated cost is under £50,000. This includes the cost of supporting aircraft, including the transport of relief supplies.

Sir C. Mott-Radclyffe: Does the Prime Minister agree that, unless he was far more certain than he could have been that he and he alone was likely to achieve some success as a result of this visit, the task was more fitted to have been undertaken by the Foreign Secretary, and at less cost?

The Prime Minister: This was considered. As I have explained to the House, one of the main reasons why I went was that I felt it necessary to represent to those whom I saw the acute anxiety of the House about a large number of questions, on which I received satisfactory replies. For example, one was about the terms under which the Nigerian Government were prepared to enter into negotiations. A great volume of expenditure is involved in relief supplies, and I had to satisfy myself about what the priorities were in the matter of relief. The hon. Gentleman will know that, quite apart from the deep issues on the war and on relief which have upset the House, the continuance of the war for a day longer than is avoidable involves this country in heavy economic cost.

Mr. Ogden: Is my right hon. Friend aware that the best possible way in which £50,000 could be expended by a nation as rich as ours is in an endeavour to bring peace and prosperity to our brothers in Africa?

The Prime Minister: If one compares the cost of the visit and the achievements, not only in Nigeria but also in talks with O.A.U. and with the Emperor, with the continuing cost to this country for two years, the cost of the visit represents a small fraction of the cost to this country in one day of the war.

Sir A. V. Harvey: Will the Prime Minister say what was the cost of sending H.M.S. "Fearless" to Lagos? In retrospect, does not he think that H.M.S. "Fearless" would have been better employed in the Mediterranean, where there was considerable activity by ships of other nations?

The Prime Minister: H.M.S. "Fearless" was not due at that time to stay in the Mediterranean. To answer the question I would have to get separate costs for various elements in the estimates being constructed. There were a


number of reasons why H.M.S. "Fearless" was used. One was that, if it had been possible—and it looked likely at one moment—that there could be talks with Colonel Ojukwu, which might have helped to resolve the issue more quickly than it has been resolved, then it was desirable to give him a chance of talks in an area in which he would feel thoroughly secure and away from Federal control.

Mr. John Mendelson: Will the Prime Minister also recall that before his visit he had been hard pressed by many of us to make representations to the Nigerian Federal Government on the cessation of bombing operations and also about ensuring the personal safety of the Ibo people in the entourage of Colonel Ojukwu. We are greatly satisfied that he himself undertook this task.

The Prime Minister: I thank my hon. Friend for those words. Those were two of the four important issues which I took up with General Gowon. In fact, the visit was originally planned and settled, not even in the period when these representations were being strongly made. It had been settled some weeks before, and before the serious debate which took place in the House was scheduled. After that I felt all the more strengthened in the representations which I had to make.

Sir Knox Cunningham: If the Prime Minister feels that the expenditure of £50,000 was of value to this country in respect of the visit to Nigeria, would he consider going to Anguilla?

Mr. James Johnson: Is the Prime Minister aware that it is not back-benchers who matter in this respect, but that the O.A.U. thought that the Prime Minister did a magnificent job in going there, and that they are saying so in Africa at this moment?

The Prime Minister: There are one or two developments which have not yet, we are sad to see, led to a cessation of the fighting. The discussions in Addis Adaba following those in Nigeria may have contributed in small measure to this. Where I take issue with my hon. Friend is that I know that when I was expressing these anxieties in Nigeria, I was speaking for a large number of hon. Members on the other side of the House as well as on this side. My doing so was generally welcomed in Africa.

BUSINESS OF THE HOUSE

Mr. Heath: Will the Leader of the House kindly give us the business for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): The business for next week will be as follows:
MONDAY, 28TH APRIL—Supply [18th Allotted Day]: Until Seven o'clock, there will be a debate on an Opposition Motion on the effect of high interest rates and the change in the gilt-edged market on local authority finances.
Afterwards, a debate on refunding of the betterment levy, which will also arise on an Opposition Motion.
Motions on the Eggs (Guaranteed Prices) Order and on the Sunday Entertainments Order for Derwent.
TUESDAY, 29TH APRIL—Progress on the remaining stages of the Post Office Bill.
WEDNESDAY, 30TH APRIL—Completion of the remaining stages of the Post Office Bill. Afterwards, remaining stages of the Education (Scotland) Bill, and Lords Amendments to the Agriculture (Spring Traps) (Scotland) Bill.
THURSDAY, 1ST MAY—Consideration of Private Members' Motions until Seven o'clock.
Afterwards, consideration of Lords Amendments to the Foreign Compensation Bill.
Motion on the Motor Vehicles (Tests) (Exemption) Regulations.
FRIDAY, 2ND MAY—Private Members' Bills.
MONDAY, 5TH MAY—Supply [19th Allotted Day]:
The topic for debate will be announced later.

Mr. Heath: Last Thursday, when the Leader of the House was pressed, he said that it was right that the Secretary of State for Social Security ought to make a statement about the cost of the contributions for increased pensions. When will the Leader of the House assert his authority to ensure that his right hon. Friend makes this statement which the


House badly needs? When will the horrible truth be revealed?
Did the right hon. Gentleman hear the Prime Minister, in answer to a supplementary question a moment ago, say that he could not announce a date when the Bill for reform of trade unions would be published because it was not even drafted yet? What is the explanation of this extraordinary state of affairs in which a White Paper was published months ago and the Government promised legislation and now, when the Chancellor of the Exchequer in his Budget has put so much emphasis on the urgency of a Bill for the good of the economy, it is not even drafted? When will it be published?

Mr. Peart: On the second matter which was raised, I hope that we shall have the Bill before Whitsun. I cannot be specific, but I will do my best. I hope the right hon. Gentleman will appreciate that I am giving him a fair answer to his question. I will do my best to inform the House. I hope that if possible it will be just before Whitsun.
On the first matter which was raised, I conveyed to my right hon. Friend and his colleagues that I thought that a statement should be made and that I felt it was right to do so. The Chief Secretary made a statement—[Interruption.] I know that it was criticised by hon. Members, but as Leader of the House I felt that I should convey the views of hon. Members, and I did so sincerely.

Mr. Heath: Would the Leader of the House accept that for a Minister to stand up and say that he is making a statement when he has no statement to make, is not in effect making a statement for the benefit of the House? May I express appreciation for his saying that he does not know when the trade union Bill will be published.

Mr. Peart: I said that I would do my best to get it out as quickly as possible.

Mr. Shinwell: Does my right hon. Friend intend next week to move his Motion on declaration of Members' interests? Although I in no way doubt the integrity of the Members whose names are included in the Motion, would it not have been more satisfactory if he had ascertained whether those who had been nominated for this Committee had declared their interests before accepting

appointment? May we have some satisfaction about this matter? Are all those persons nominated to the Select Committee quite free of outside interests in order to ensure that no prejudice is injected into the discussion?

Mr. Peart: I should have thought not. I am sure that every hon. Member who has been mentioned will deal with the matter impartially and honourably.

Mr. Boyd-Carpenter: Could the right hon. Gentleman say when his right hon. Friend the Secretary of State for Social Services will make the statement telling us what will be the increased contributions for National Insurance? Will that statement also cover the other changes which are always made at the same time, such as those in respect of war pensions and supplementary benefits?

Mr. Peart: I cannot say when, but I will convey hon. Members' views to my right hon Friend accordingly.

Mr. Dalyell: Could we have an early debate on the interesting White Paper, which was presented last week by the Leader of the House, on marine science and technology?

Mr. Peart: I agree that it was an interesting paper, and I hope that hon. Members will have read it. Although I have responsibility for it, I am afraid that it will not be discussed next week.

Dame Irene Ward: May I ask the right hon. Gentleman if he could find time to discuss a constitutional matter? When last Monday I asked the Minister of Social Security whether he could have an inquiry into nurses' problems, which are very important, he said that this was a matter for the Whitley Council. But I notice that when a number of demonstrating nurses went to the Elephant and Castle, where his office is siutated, he met them and said that he would look into the matter. What is the constitutional position, and why should not the statement about the problem of the nurses be made to Parliament rather than on the steps of the Elephant and Castle?

Mr. Peart: I see nothing wrong in making a speech outside, even though it may be at the Elephant and Castle. I do not think that this was a breach of constitutional propriety. I agree that it is a good thing that Parliament should


be informed, and if a statement is necessary I will ask my hon. Friend to make it.

Mr. Thorpe: Reverting to the matter of trade union legislation, does the Leader of the House recollect that the First Secretary of State, in her speech on the Budget, said that there would first be published a White Paper giving the Government guidelines on industrial reform.
May I ask two questions? First, when does he expect the White Paper to be published? Secondly, will the House have the opportunity to debate the proposals before they are turned into legislative form?

Mr. Peart: The whole question relates to the matter to which the Leader of the Opposition rightly drew my attention, namely the date of the publication of the Bill.

Miss Lestor: I would draw attention to Motion No. 268—
[That this House deplores the decision of the Barbarians Rugby Club to participate in matches in Southern Rhodesia and considers that this action actively contributes towards bolstering the illegal Smith régime.]
which is on the Order Paper in my name dealing with the visit of the Barbarians to Southern Rhodesia. Could we ask him to find time to debate this Motion about the whole question of sports activities by apartheid teams?

Mr. Peart: I am aware of the sentiments expressed in this Motion, and I understand them, but I am afraid the answer is "not next week."

Mr. Peyton: The right hon. Gentleman told us that he informed his right hon. Friend the Secretary of State for Social Services that, in his opinion, a statement ought to be made to the House. What further steps is he now to take to persuade his right hon. Friend that such a statement is overdue? We all hope that he will be much more successful this time. Is he losing his influence with his colleagues?

Mr. Peart: I would not say that. I hope that I have a good influence.

Mr. William Hamilton: May I refer to the question raised by my right hon.

Friend the Member for Easington (Mr. Shinwell) about the Motion on to-day's Order Paper, "Members' Interests (Declaration)"? Could he give a categoric assurance to the House that there will be an opportunity to debate this Motion, if only so that Members can express their anger and frustration at the apparently arbitrary exercise of the kind of patronage that goes with the selection of members for this Committee and others, without reflecting in any way on the merits and intentions of the members selected?

Mr. Peart: I hope that my hon. Friend will not say that there is patronage here. This is a group of Privy Councillors, with the exception of the hon. Member for Orpington (Mr. Lubbock). It is a Committee which will have to do a hard job. There is no question of patronage.

Mr. Godber: Would the right hon. Gentleman confirm that the Northumberland Committee will be publishing its report next Thursday and will the Minister of Agriculture be making a statement in this House on that date?

Mr. Peart: I hope this will be on 1st May.

Mr. Ellis: Does my right hon. Friend realise, with regard to the matter raised by my right hon. Friend the Member for Easington (Mr. Shinwell), that while we are all sure that all Members of the House are honourable, it seems that there is now some dispute about some being more honourable than others? Therefore would he make it clear—

Mr. Speaker: Order. We cannot debate at this moment the Motion on today's Order Paper.

Mr. Ellis: Will he make it known to his right hon. Friends that we want this matter cleared up very quickly, so that these points do not arise?

Mr. Peart: I do not think they should arise. I assume that all hon. Members are honourable men.

Mr. Biffen: Reverting to the Second Reading of the Industrial Relations Bill, can the right hon. Gentleman make an early statement, preferably next week, confirming that the Committee stage will be taken on the Floor of the House?

Mr. Peart: I cannot do that at the present moment.

Mr. John Fraser: Does my right hon. Friend recollect the assurance he gave to communicate to the Foreign Office the concern of the House over the Foreign Office decision on the resolution of the Council of Europe on Greece? When will he complete the second part of that assurance by making a statement to the House on what the Foreign Office issues are? Does he appreciate that it must be made before next week, because the Council of Ministers meets on 5th May, the following Monday?

Mr. Peart: I have conveyed the views of my hon. Friend and those who feel as he does. I will convey again to my right hon. Friend that certain hon. Members would wish a statement. I cannot promise one next week.

Sir Knox Cunningham: As the Leader of the House has said to my right hon. Friend the Leader of the Opposition that he hopes that the trade union Bill will be introduced before Whitsun, will he say whether it will go through all its stages before the Summer Recess?

Mr. Peart: Let us wait and see.

Mr. Hector Hughes: In the name of humanity, can my right hon. Friend find time next week for my Early Day Motion No. 257—
[That this House is of opinion that Clause 12 of the regulation relating to disabled persons' cars, which provides that when the child or children of the disabled person reaches the age of 14 years or ceases to depend on the disabled person, the car will not be replaced, by substituting a later age which will enable the disabled person to continue his or her care of the relevant child or children.]
Strange as it may seem, there are disabled persons, even among the robust and gallant population of Aberdeen.

Mr. Peart: I understand that my hon. and learned Friend had a Question down to the Secretary of State to which he has received an Answer. I have nothing to add to that, although I appreciate his concern in this matter.

Sir F. Bennett: Can the right hon. Gentleman say when the Finance Bill will be published? Can he at the same

time give an absolute undertaking that the material and information we are still awaiting about National Insurance contributions will be available before the Second Reading of the Bill? Will he give that assurance in such a categoric form that none of his colleagues, not even the Chief Secretary, will be able to evade or misinterpret it?

Mr. Peart: I thought that I had made my position plain on the earlier questions. As to the later question he asked, it would be convenient for Members on both sides if I say that it is proposed that the Committee stage should be taken in two parts, one upstairs and one on the Floor of the House, and that important matters affecting the Finance Bill, such as S.E.T., Corporation Tax and Purchase Tax, should be taken on the Floor of the House, while detailed minutiae should be taken upstairs. This will be done.

Mr. John Mendelson: Will my right hon Friend, in spite of the unholy pressure from the declared enemies of the trade union movement opposite to hurry a proposed Industrial Relations Bill, take note of the fact that the Trades Union Congress is proposing new alternatives to suggestions which have been made and that the Government are committed to full consultations? Would he declare that there is no hurry? This is a responsible task and the Government ought to take their full time in reconsidering these matters.

Mr. Peart: I hope that my hon. Friend appreciates that my right hon. Friend the Secretary of State does believe in adequate consultations and that she has already had consultations.

Mr. Edward M. Taylor: Will the right hon. Gentleman be able to tell us next Thursday the date of announcement of the increased National Insurance stamp? Does he realise how urgent this is for some small firms whose businesses are already being seriously threatened by the big increase in S.E.T.?

Mr. Peart: I will convey that to my right hon. Friend. I cannot say it will be next week.

Sir C. Osborne: Since yesterday's sterling rate dropped to the lowest point ever and is reaching the point now that a further fall would suggest yet another


devaluation—[HON. MEMBERS: "Oh."] This is true. Will the Leader of the House try to find time, next week if need be, for an emergency debate on the steps the Government will take to preserve sterling, as promised by the Prime Minister

Mr. Peart: I understand the hon. Member's views which he puts frequently and eloquently to the House. I hope he will appreciate that to panic over day-to-day movements of sterling would be very wrong. I do not think that a statement will be called for.

Dr. Gray: In view of the letter to The Times signed by 10 eminent professors of the L.S.E., would my right hon. Friend arrange a debate next week into the affairs and direction of the L.S.E.?

Mr. Peart: No. That is not a matter in which I should get involved. A statement is not necessary.

Mr. Dudley Smith: In view of the most unsatisfactory Answers we have had earlier this afternoon on the future of comprehensive schooling and the policy for the grammar schools, and the doubt cast on the future of the direct grant schools, would the right hon. Gentleman consider providing time for an early debate on this subject in advance of the Government's forthcoming Bill which will very seriously restrict the education powers of local authorities?

Mr. Peart: As the hon. Gentleman knows, I too have an interest in education. It might be useful if the Opposition sought to take a Supply Day on this. They have that opportunity. I hope that when my right hon. Friend does present a Bill the hon. Gentleman will give it his full support.

Mr. Eldon Griffiths: On the subject of Mr. Gerald Brooke, the Leader of the House will recall the Foreign Secretary's statement on Tuesday that he was making inquiries and my right hon. Friend's willingness to await those inquiries. Would he convey to the Foreign Secretary that the House is anxious to hear the results of his inquiries, when he has completed them, at the earliest possible stage?

Mr. Anderson: Would my right hon. Friend consider having an early debate on the Report of the Hunt Committee

on intermediate areas, published today, which will have serious consequences for the constituencies of many hon. Members.

Mr. Peart: I hope that my hon. Friend will carefully study the Report before pressing me for a debate. Certainly we cannot have one next week.

HUNT COMMITTEE (REPORT)

The Secretary of State for Economic Affairs (Mr. Peter Share): With permission, Mr. Speaker, I should like to make a statement on the Report of the Committee on the Intermediate Areas under the chairmanship of Sir Joseph Hunt which is published today. Copies are available in the Vote Office. As the Report touches on the interests of so many parts of the country my statement will be somewhat lengthy, and I apologise for this.
The Committee was appointed in September 1967 and Sir Joseph Hunt and his colleagues have prepared a very full Report on a subject of great complexity. The Government warmly appreciate the Committee's work.
Its principal conclusions and recommendations are as follows:

(i) The whole of the Yorkshire and Humberside and the North West Regions should qualify for an entirely new 25 per cent. building grant not linked to the creation of new jobs. They should also qualify for training grants and direct training assistance on the same basis as in the development areas.
(ii) In selected growth zones within these regions there should also be Government estates and factory building with supporting investment including link roads.
(iii) For these two regions and in the Notts./Derby and North Staffordshire planning sub-divisions there should be an 85 per cent. grant for derelict land clearance as in the development areas. The clearance programme should be speeded up in all these areas and in the development areas.
(iv) The industrial development certificate control should be relaxed throughout the country by raising the exemption to 10,000 square feet.


(v) The Merseyside development area should be de-scheduled and treated on the same basis as the rest of the North West Region.

Four members in three notes of dissent have expressed reservations about some of the Committee's findings.
The Government have considered these recommendations against the background of our assessment of general economic prospects for the regions in the recently published Economic Assessment to 1972, in the context of our regional policy as a whole and within the need to limit public expenditure.
We are convinced that it is necessary to retain for the development areas and special development areas a large margin of preference in assistance to industry. Although the massive increase in Government preferential assistance to industry—for these areas—from some £30 million in 1964 to over £260 million—is making a vital and growing contribution to overcoming their still serious structural problems, none of these areas is yet ready for de-scheduling. The Government do not propose therefore to accept the Hunt Committee's recommendation for the de-scheduling of Merseyside.
Against this background we have considered carefully on the one hand the Hunt Committee's arguments for spreading limited resources over the whole of the two regions concerned and on the other hand for concentrating these on a few areas where present and prospective needs are greatest. We have concluded that the better course is to concentrate assistance to industry with an employment link on a strictly limited number of smaller areas. For this reason, we have not been able to accept the Hunt Committee's proposal for a general building grant.
The Government consider that the selection of areas to be given assistance to industry must be governed strictly by criteria of need, especially the level and character of unemployment and numbers of unemployed, the incidence of high net outward migration and the real scope for industrial growth.
I turn now to our proposals.

Assistance to Industry: Areas

In indicating the areas to which in our view these criteria most clearly point I must emphasise that I describe them in broad terms. We shall take fully into account any further views of the regional economic planning councils. Consultations with them will be completed and the precise boundaries of these new intermediate areas will be announced after the Whitsun Recess. Thereafter we will bring forward the necessary legislation as quickly as possible.

These areas are:

The Yorkshire coalfield area, the Erewash Valley area of Derbyshire, parts of Humberside, the main industrial areas of North East Lancashire east of the proposed New Town, a substantial part of South East Wales, Leith and Plymouth.

We have considered the problems of other areas, but we have concluded that these problems do not at present justify the use of financial incentives to divert industry to them.

Assistance to Industry: Measures

We propose to seek powers to make available to these intermediate areas certain assistance under the Local Employment Acts. This will not include the loans and grants, for general purposes, which are made in the development areas on the advice of the Board of Trade Advisory Committee.

What it will include is:

(i) Grants at 25 per cent. of factory building costs;
(ii) Government built factories (both custom built and advance factories) on the same basis as in the development areas;
(iii) The full range of development area training grants and other training assistance together with assistance for the transfer of key workers.

The date from which firms will be eligible for this assistance will be announced later.

We agree with the Hunt Committee that industy in the intermediate areas should be encouraged particularly in places which have real scope for growth. The studies made by regional economic planning councils have attached importance


to the development of suitable growth zones and we will take councils' views fully into account.

There will be some additional expenditure on roads in the selected areas and proposals for the povision of new housing associated with industrial growth will be encouraged. There will also be an enlarged national programme for derelict land clearance for schemes certified by the Board of Trade as contributing to the development of industry in the area. For the North West and the Yorkshire and Humberside Regions, as a whole, in the areas selected for assistance to industry and in the North Staffordshire and Notts./Derby planning subdivisions, we intend to seek power to make available to local authorities a capital grant of 75 per cent.

I turn now to I.D.C. policy.

The industrial development certificate control is operated flexibly and with sensitivity to industrial and local circumstances, but it remains essential to relate its operation overall to the priorities of our regional policy, particularly to the needs of the development areas. The Board of Trade will continue to operate the I.D.C. control so as to give the development areas and the new intermediate areas general priority. In the rest of the North West and the Yorkshire and Humberside Regions, the control will continue to be administered liberally except in the congested parts or places otherwise unsuitable for industrial expansion.

We do not accept the Hunt Committee's proposals that the general exemption limit should be increased from the present levels to 10,000 square feet or that all control should be removed from moves to overspill towns. But we do see the need for a more flexible policy for such moves where planned development may be held up if the flow of industry to overspill towns from an exporting area is impeded. It certainly is our intention that all approved schemes for new and expanding towns should be properly supported by employment opportunities.

When these measures are in full operation their cost will amount to nearly £20 million a year. This will be met out of the very substantial and growing sums being spent on assistance to industry in

the development areas. Even so, expenditure in the development areas will remain very high and they will of course retain a very large and continuing preference over the rest of the country including the new intermediate areas.

The work of the Hunt Committee and our proposals for the new intermediate areas which have flowed from it mark an important new stage in the development of regional policy.

We are pressing on with the recovery of the development areas. We are responding flexibly to the changing needs of the different parts of the country. We will continue to seek through our regional policy to serve the interests of every region and of the whole country.

Sir K. Joseph: The House will understand that with a 250-page book available only half an hour ago and a long statement made only a few minutes earlier, it is impossible to arrive at instant judgments. Would the Secretary of State tell us when he expects to introduce legislation? Will the Government note that in addition to the £30 million spent on what were then development districts in 1964, a large share of the £275 million was spent in investment allowances and, in addition, £45 million in a full year on free depreciation in the development districts? In other words, the figure of £30 million used by the Secretary of State is a gross distortion. My hon. and right hon. Friends are very glad that the Government intend to repair some of the damage caused in the "grey areas" by this sharp discrimination in Government policy against them, for it appears that a number of the recommendations of the Hunt Committee are not being accepted. Of course, we cannot judge the sense of that at this stage.
For the moment, I would only press the Secretary of State on finance. Do we understand that the Government intend to find the £20 million, the cost of their proposals in a full year, by cutting the money made available otherwise to the development areas? If that is so, how and where are they going to cut? Would the Secretary of State note that in our view, without touching development area funds at all, there are large sums now going in R.E.P. and S.E.T. refunds to firms that neither need nor seek subsidies that could perfectly well


be used to finance the Hunt Committee's proposals, and more, on the "grey areas", if necessary.

Mr. Shore: I am interested in the right hon. Gentleman's suggestion as to how savings might be made. I want to make it perfectly clear that R.E.P. has been guaranteed for a period of seven years, and we stand by that guarantee. That apart, the saving, as I have already said, must come from industrial assistance to development areas. This will be considered and we shall make a statement on it in due course.
The right hon. Gentleman asked when we expect to be able to legislate. I hope that it will be some time this year, but I think we must wait until I make a further statement, when I hope to pronounce definitely on the areas which we have selected.

Several Hon. Members: rose—

Mr. Speaker: Order. I shall be able to call a fair number of those hon. Members who are seeking to put questions if the questions are short.

Mr. Jay: Is my right hon. Friend aware that at a time when development area policy is being more successful than ever it would be the greatest mistake to make minor changes in policy, and will he assure the House that before the Government make up their mind on all the further details they will listen to the views of hon. Members as well as to those of the regional councils?

Mr. Shore: I shall be most anxious to have the views of my right hon. and hon. Friends, as well as the views of the economic planning councils. I am not proposing major changes in development area policy. I repeat what I have said. They will continue to enjoy a clear and substantial preference over the intermediate areas.

Mr. Heath: Is the right hon. Gentleman aware that this afternoon he has given yet another example of the Government's entering into financial commitments, namely, £20 million to help the intermediate areas, to be cut from development areas, without having a clue as to how it will be done, without being able to tell the House where the cuts will be made, without having worked out any of the

sums, let alone being able to tell the House when the legislation will be brought in to put this into effect? This again, like the failure to tell us what the insurance contributions will be, is the mark of a totally incompetent Administration.

Mr. Shore: I thought that the right hon. Gentleman would make point.

Hon. Members: Answer it.

Mr. Shore: The right hon. Gentleman should not over-play his hand. He thought that he made a good point earlier this week, but he has made a bad one now. We are not entering into financial commitments. I have not yet reached the point at which I have even agreed with the E.P.C.s and others the precise areas which are to be helped.
The questions which are worrying the right hon. Gentleman will be made clear certainly not later than the time when I make my statement on which areas we have selected to help.

Mr. Simon Mahon: As Merseyside has a 3·9 per cent. unemployment problem, and is beset by massive social problems, may I, on behalf of people from the North-West, welcome the Government's statement and hope that the wisdom which they had displayed on this occasion will be echoed by better industrial relations on Merseyside?

Mr. Shore: I warmly welcome my hon. Friend's comments. Knowing the North-West Region so well, I think my hon. Friend will appreciate the difficulties in arriving at the best judgment about how to help the region as a whole, and we have tried to get the right balance.

Mr. Geoffrey Lloyd: Is the right hon. Gentleman aware that the Hunt Committee very closely argued its proposal for what it called a relatively modest change to increase the exemption limit for I.D.C.s? In the light of that, and the abrupt and summary dismissal of this policy by the Government, it will be felt in the West Midlands that the Government have sacrificed a strong economic case to the political prejudices of the Labour Party.

Mr. Shore: I do not think that is so. I understand the right hon. Gentleman's concern and interest in this matter, but I


think that one of the things that has come out very clearly in the discussions which Sir Joseph Hunt has had, and in the evidence that he has received, is that there is a great deal of misunderstanding about the way in which I.D.C. control is operated. It is not the same thing to say that there is, as it were, a limit beyond which people cannot go without getting a certificate, as it is to say that this is, as it were, a veto on new developments. It is nothing of the kind. All it means is the more industrial expansion is brought within the possibility of being steered into development areas than would otherwise be the case, and I think that we must give that priority.

Mr. Anderson: Can my right hon. Friend confirm that in delimiting new areas one of the criteria will be the contribution which border firms make to the employment needs of areas within an existing development area? If not, surely it would be ludicrous if firms such as those in South Monmouthshire which get more than two-thirds of their work force from within a development area received no assistance under the new scheme.

Mr. Shore: As my hon. Friend knows, there is always a problem at the frontier of any scheme which is introduced. All that I can do is to undertake to look at the point that he has made.

Mr. Wall: I regret what appears to be a considerable watering down by the Government of the Hunt Committee's proposals for Yorkshire and Humberside. Will the right hon. Gentleman bear in mind that it is no use trying to attract industry to a growth area such as Humberside unless, at the same time, we provide good communications, both roads and the Humberside bridge which was promised in a certain famous by-election about three years ago?

Mr. Shore: I bear in mind the problems of Humberside. I hope that the Humberside Report will be published next week.

Mr. Barnett: Is my right hon. Friend aware that, much as one would want aid in one's own area, he is right not so to water down the assistance to development areas as to get the worst

of all possible worlds? On the other hand, will he reconsider this question of the R.E.P. and save the £100 million involved, bearing in mind that most industrialists do not take this into consideration in working out their projects? Will he, therefore, use that money towards the help that he is now proposing to give for the development of derelict land and other things?

Mr. Shore: I have heard my hon. Friend before on the subject of R.E.P., and it would merely be going over old ground to say that I profoundly disagree with him as to the benefits of what is involved.

Mr. Richard Wainwright: Is the right hon. Gentleman aware that his proposal, even after the legislation is eventually passed and Government policy has got under way, will amount to less than £20 million, compared with the £260 million a year now being devoted to development areas? Is he further aware that in abandoning the idea of intermediate areas and scaling them down to intermediate districts he is surrendering to Conservative policy, accompanied by a strong flavour of party political lobbying? Does the right hon. Gentleman agree that if the intermediate regions were protected by powerful and democratic regional councils the Government would never have been able to get away with the repudiation of this Report?

Mr. Shore: I shall consult the councils about the Hunt Committee's Report as a whole and about my proposals.
The hon. Gentleman has made for me the point that I made earlier, that there will remain a strong differential in favour of the development areas. I do not apologise for that.
Secondly, with regard to the scope of the intermediate areas, what we have done is to narrow the area, but we have made available within the intermediate areas which I have defined, or we are proposing to make available, just that assistance which Sir Joseph Hunt proposed, with one exception, namely, that building grants will be employment linked, and not simply without such a link.

Mr. Arthur Davidson: Is my right hon. Friend aware that his words would appear to be deserving of a great and


warm welcome in North-East Lancashire, despite the predictably grudging response by hon. Gentlemen opposite? Is my right hon. Friend also aware that if he said these recommendations would be implemented very soon he would receive an even warmer welcome in North-East Lancashire?

Mr. Shore: I know my hon. Friend's keen and continuing interest in the problems of intermediate areas. Having said that, I hope to make a definitive statement shortly after Whitsun; I hope that my hon. Friend will not think that we are dragging our feet when he takes account of the need to have proper consultations with the E.P.C.s and other bodies.

Mr. Hirst: Although the right hon. Gentleman's reply to my right hon. Friend the Leader of the Opposition rather devalues his statement, may I ask whether he will nevertheless bear in mind that the failure of the Committee to recommend higher investment grants for the wool and textile industry will be deplored, and will he give serious consideration to reversing that decision? In that regard, will the right hon. Gentleman bear in mind that the difficulties of the Committee in arriving at that decision are by no means understood, and that the situation is quite simple and easy to investigate?

Mr. Shore: I should not like to be drawn too far along that road at the present time. The proposal was put forward, but it did not win approval. Nor do I necessarily accept that the best way of helping the wool and textile towns is to accept the hon. Gentleman's suggestion.

Mr. Eadie: Would my right hon. Friend make it clear that the central theme of Government policy is the proper redistribution of industry? Would he also make it clear that he rejects the philosophy of the laissez faire economy as espoused by hon. and right hon. Members opposite, which would mean disaster for Scotland, Wales, the North-East and other areas? Is my right hon. Friend aware that the people of Leith, and particularly my hon. Friend the Member for Edinburgh, Leith (Mr. Hoy), who has fought very hard for some alleviation of this policy, will be very grateful for what he has said?

Mr. Shore: I thank my hon. Friend. I assure him that we cannot afford a laissez faire policy for the location of industry.

Mr. Tilney: I welcome the decision not to de-schedule Merseyside, but would the right hon. Gentleman bear in mind that what Merseyside needs more than anything else to become a growth area is better communications between north and south and between Merseyside as a whole and the M6?

Mr. Shore: All that Merseyside needs is the continuation of existing policies.

Mr. Milne: Has my right hon. Friend noted that the solution to the problems of the intermediate areas is similar to that for the development districts, namely, full employment? Until there is an intensification of Government policy towards that end, the problems of both types of area will remain unsolved.

Mr. Shore: The major purpose of the policy is to deal with the problems of unused resources and, above all, unemployment. Although my hon. Friend has spoken of development areas as opposed to intermediate areas, only 18 months ago we defined special development areas in recognition of particular problems in development areas.

Mr. Stodart: Is the right hon. Gentleman aware that, despite the remarks of the hon. Member for Midlothian (Mr. Eadie), there will be no rejoicing in the City of Edinburgh tonight as a result of the Report? The right hon. Gentleman mentioned a concession to Leith. Would he make clear whether it covers the whole of Leith or merely the dock area? Will the Government's review of the situation in Edinburgh recommended in the Report be continuous?

Mr. Shore: I can say nothing about the borders. This is one of the questions on which I want to consult the Economic Planning Councils. I do not think that I understood the hon. Gentleman's second question. Would he repeat it?

Dr. John Dunwoody: I congratulate my right hon. Friend on his response to the Hunt Report, and particularly on his continued concentration on the development areas and his rejection of the proposed modifications of I.D.C. policy.


Does he accept the suggestion that there should be a comprehensive review of existing development area policy?

Mr. Shore: The Government keep development area policy under constant review. We have no proposals for a separate or independent review.

Mr. J. H. Osborn: May we have a definition of the new development districts? For instance, will the definition of the South Yorkshire coalfield include the area covered by the 44 Group and be incorporated with North Derbyshire and include Sheffield?

Mr. Shore: I am not talking about development districts. I am, for the most part, talking about fairly substantial intermediate areas. I cannot help the hon. Gentleman about the boundaries, for the reasons I have given.

Mr. Mikardo: While welcoming my right hon. Friend's statement, may I ask him whether he recalls that in a previous incarceration he was the author of Labour Party policy documents which argued that the Conservative policy of bribing enterpreneurs to go to development areas to provide employment was inadequate and that it would have to be supplemented by measures to bring public enterprises to the development areas? May I remind him that the present policy has resulted in a situation in which the cost to public funds of providing every job is very high, running to thousands of pounds? What has happened to his former beliefs?

Mr. Shore: I recall very well, as does my hon. Friend, that the Labour Pasty and this Government are pledged to do all in their power to correct regional imbalance at the earliest possible moment. We shall use whatever instruments of policy are to hand, whether public or private enterprise, and inducements to carry out that policy.

Mr. Maxwell-Hyslop: Since the Government reduced the maximum square footage which can be built without an I.D.C. from what it was under the Conservative Government, is it not clear that our judgment has been vindicated by the Hunt Report and that the Government are going directly against and not just ignoring

the recommendations of the Hunt Report?

Mr. Shore: I do not know what the hon. Gentleman's judgment was, or what that of his party was, or what period he is speaking of. But I would not accept that we are rejecting the Hunt Report or its proposals on I.D.C.s. We have indicated that we shall make I.D.C.s freely available in the intermediate areas. That is sensible. But if we are to open up the areas in which there is to be a free I.D.C. policy, it is common sense to maintain I.D.C. control strictly over congested and prosperous areas.

Mr. George Jeger: Can my right hon. Friend say when he expects his policy to have some practical application? For example, can he advise the local authorities in my constituency, in some parts of which unemployment is running at 11 per cent., that they can take action, in which they have been frustrated up to now, by inviting industrialists to set up their factories in the locality?

Mr. Shore: I advise my hon. Friend, impatient as he inevitably and understandably is, to wait for my statement after the Whitsun Recess.

Mr. Clark Hutchison: Does the right hon. Gentleman realise that, while I am grateful for what has been done for Leith, there is no boundary between Edinburgh and Leith? Why should Edinburgh be excluded when unemployment there is increasing? Would the right hon. Gentleman have another look at the recommendations of the Edinburgh Chamber of Commerce?

Mr. Shore: The reason for this is straightforward. We take the view that Edinburgh as a whole has much more favourable prospects.

Mr. Alfred Morris: Is my right hon. Friend aware that his proposals will be received with much pleasure in many parts of Lancashire? Can he say when he is likely to be able to estimate the financial advantage which will accrue to the area of the North-West Economic Planning Council, or can he give that figure now?

Mr. Shore: I cannot give the breakdown now. It would be premature before we have agreed on the precise boundaries of the areas themselves.

Mr. Emery: Is the right hon. Gentleman aware that, with the exception of Plymouth, the South-West will be particularly disappointed with the Report and by what the right hon. Gentleman has not had to say about the South-West? Would he accept immediately the one recommendation in the Report to benefit the South-West and give a high degree of priority to the spine road?

Mr. Shore: The spine road already has a very high degree of priority.

Mr. Emery: It has not.

Mr. Shore: The whole of it to Plymouth will be either completed or under construction by 1975. That is well on the way. [Interruption.] If the hon. Gentleman would consider the length of the road, he might not make such silly comments. As for the South-West as a whole, I am glad to be able to announce the intermediate proposals for Plymouth, which I know will be well received.

Mr. Ogden: Would my right hon. Friend pass the thanks of the whole House to the Chairman, members and staff of the Hunt Committee for the work which they have done? Would my right hon. Friend confirm that, far from his statement being politically motivated, the recommendations for the North-West which the Government have accepted are exactly those made by the North-West Economic Development Association, which represents all parties? Would he request my hon. Friend the Member for Bootle (Mr. Simon Mahon) to ask my hon. Friend the Member for Poplar (Mr. Mikardo) to visit the Post Office Giro on Merseyside?

Mr. Shore: I shall willingly convey the thanks of my hon. Friend and other hon. Members to Sir Joseph Hunt, who has already received the warm appreciation of the Government.

Mr. Eldon Griffiths: Is the right hon. Gentleman aware that in many areas of East Anglia wages are lower and job opportunities are scarcer than in some of the intermediate areas which he proposes to help? Does he not recognise that we simply cannot build successful overspill towns unless we get more industry? Is he aware that his own

regional policy is denying that industry to us?

Mr. Shore: If the hon. Gentleman studies my statement carefully, he will perhaps be moderately pleased with what I had to say about overspill towns and the inflow of industry to them.

Mr. Hazell: I welcome the fact that my right hon. Friend is to meet the regional economic planning councils. Will he take full note of what the East Anglian Council will have to say regarding Norfolk, with its high unemployment and low earnings, which are referred to time and time again in the Report, with a viewing to his giving some considerations to these problems?

Mr. Shore: I must not be over-encouraging in what I say at present. I will carefully consider any representations by the E.P.Cs.

Mr. Eyre: Is the Secretary of State aware that the Report refers to the West Midlands as a seedbed area for new development and goes on to call for the relaxation of I.D.C. control, which affects small firms which provide the new infant industries? Will he give sympathetic consideration to this, which could well be of great importance to the whole country's export potential?

Mr. Shore: I fully appreciate the seedbed argument, but I do not think that this in itself justifies the recommended changes in I.D.C. controls.

Mr. Alexander W. Lyon: Does my right hon. Friend agree that his modifications of the Hunt Committee's proposals will make it much more difficult for areas such as mine which are caught between intermediate districts and development areas? In view of this, is there not something to be said for the Hunt Committee's proposal that there should be some de-scheduling of the fringe areas which do not need the benefit that is at present given to development areas?

Mr. Shore: There is, as I said earlier, always a border or frontier problem. I cannot at present promise anything in the way of changes in development area frontiers.

Dame Joan Vickers: Does the right hon. Gentleman think that what he has given us today fulfils the promise made


by the Prime Minister in Plymouth recently that the Hunt Report would make a major contribution to the area? I reiterate that what we need is the spine road and a further study of the airport. We have already had three.

Mr. Shore: The answer is, "Yes—most certainly yes".

Mr. E. Rowlands: Does my right hon. Friend realise that everybody in Wales will welcome the decisions, particularly the decision to include an intermediate area in the South-East? My right hon. Friend referred to a substantial part of the South-East. Will he say which part of the South-East? Does he realise that the real problem in areas like South-East Wales is not so much attracting new industry as preventing industry from leaving and jumping over the border into nearby development areas?

Mr. Shore: On the second point, I know about my hon. Friend's concern, but I advise him closely to study the evidence which was put forward and which is contained in the Report. As for the boundaries, I can only repeat that I must consider these and consult the E.P.C.s.

Several Hon. Members: rose—

Mr. Speaker: Order. I must move on.

ROYAL ASSENT

Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act, 1967, that The Queen has signified Her Royal Asent to the following Acts:

1. Customs Duties (Dumping and Subsidies) Act, 1969.
2. Glasgow Corporation (Superannuation &amp;c.) Order Confirmation Act, 1969.
3. Barnsley Corporation Act, 1969.

Orders of the Day — AIR CORPORATIONS BILL

4.26 p.m.

Order for Second Reading read.

The Minister of State, Board of Trade (Mr. William Rodgers): I beg to move, That the Bill be now read a Second time.
The Bill will, I believe, be welcomed by the House because it will give B.E.A.—Britain's leading airline and flag carrier in Europe—the opportunity to face the future on a sound financial footing. It implements the Government's pledge of 2nd August, 1966—the "Mulley pledge", as it has become known—when the then Minister of Aviation told the House that B.E.A. would re-equip with British aircraft instead of the American alternatives it would have preferred. At that time the Minister said that the Government would
take steps to ensure that B.E.A. is able to operate as a fully commercial undertaking with the fleet it acquires."—[OFFICIAL REPORT, 2nd August, 1966; Vol. 733, c. 261.]
The events giving rise to the pledge underline the continuing problem of the relationship between Government—any Government—and the nationalised industries, bearing in mind, on one hand, the Government's responsibilities for the economy as a whole and, on the other, the prime need of the industries to be allowed to operate commercially, free from day-to-day intervention. Government policy and the affairs of B.E.A. interact in various ways, including the Government's concern with the well-being of the aircraft industry as well as the operators and with the balance of payments.
The State has a major interest, as owner and banker, in the nationalised airlines conducting their affairs as fully commercial undertakings able to compete with foreign airlines on equal terms. I am sure that this aim is common to us all. But in the last resort the Government, with the agreement of the House, must reserve the right to decide whether broader objectives outweigh the commercial considerations which should normally guide B.E.A. As the Select Committee on Nationalised Industries said in its Report of 1967 on B.E.A.:
In so far as the Government's choice of aircraft to be developed is influenced by considerations of international co-operation and of


dollar-saving and equalising the work load on the industry, your Committee accept that the interests of Government policy override B.E.A.'s interests …".
The problem, then, is this. How can we reconcile the consequences of proper Government intervention, particularly over re-equipment, with full commercial responsibility for B.E.A. at all other times?
It may be helpful if I briefly recall the circumstances leading to the present situation. In June, 1966 B.E.A. proposed to re-equip with a fleet of 23 Boeing 737s and 18 Boeing 727s. This was the fleet composition of B.E.A.'s choice based on its commercial judgment. It would have been failing in its responsibilities if it had not made clear the best way in which it judged that its needs could be met. I am sure again that there can be no quarrel with this. But B.E.A. was not allowed to buy the aircraft of its choice. The Government took the view that it should continue to fly British. This decision was welcomed by both sides of the House. Accordingly, Government approval for B.E.A.'s proposal to purchase 18 BAC 1–11/500s, with an option on a further six, was announced by my right hon. Friend's predecessor in a statement to the House on 16th December, 1966.
For the second and major part of its re-equipment, B.E.A. asked in February, 1967 for approval to buy 30 BAC 2-11s, with an option for a further ten. Hon. Gentlemen will recall that the position was complicated by the tripartite agreement with the French and Germans to build a European airbus using Rolls-Royce's RB207 new technology engine; and also by the concurrent efforts by Rolls-Royce to secure American orders for the RB2-11 engine, which was also the designated power unit for the BAC 2–11. However, after thoroughly examining B.E.A.'s proposal, the Government decided that the BAC 2–11 could not be supported, since there did not appear sufficient justification for the investment required for launching aid.
Instead, B.E.A. was told that the Government were prepared to meet a share of the launching costs for the Trident 3B and to approve its purchase should B.E.A. decide to buy it. B.E.A. accordingly proposed a purchase of 26 Trident 3Bs, with an option for a further ten,

subject to fulfilment of the 1966 pledge. My right hon. Friend gave approval in principle to the purchase on 13th March last year.
I must make quite clear that the assistance provided by the Bill is not a subsidy for operating British aircraft. The aircraft B.E.A. has chosen—the BAC 1–11 certainly and the Trident 3B, we hope—are fine examples of what the industry can do. Let there be no doubt about that: they are planes of which British industry, and Britain, can be proud. The BAC 1-11s already in service are proving attractive to European passengers, and I am confident that both British jets will prove profitable to B.E.A., once maximum utilisation has been achieved. But—and this is the crux of the matter—it will take some time before this can happen: and whereas the Trident 3B cannot come into service before the 1971 summer season, the American aircraft of B.E.A.'s choice would already be coming into service now. The Boeings are also established aircraft which could probably have given B.E.A. a high rate of utilisation from the outset. In addition, some of their operating characteristics, and also their size, would have allowed a pattern of operations more suitable for B.E.A.'s own particular network. This is no reflection on the British aircraft but a plain statement of fact about needs and means in the highly complex and very competitive airline industry. I should perhaps add that the independents are always free to buy what they want where they can get it to meet their own particular operational needs, which are not necessarily the same as B.E.A.'s.
As the House knows, the Edwards Committee's Report is to be published shortly. My right hon. Friend has already received it. The Committee has assumed that the Government will implement their promise to give B.E.A. the opportunity of operating commercially; and nothing in the Report casts any doubt on the desirability of doing so. There can thus be no controversy about the wisdom of, or need for, implementing the Government's pledge at this stage.
The financial settlement we reached with B.E.A., which is embodied in this Bill, was outlined in my right hon. Friend's statement to the House on 10th July last. We are reducing the capital


liabilities of B.E.A. by some £25 million with effect from 1st April, 1968, and are providing for this sum to be carried to a special account from which sums will be credited to B.E.A's revenue accounts in predetermined instalments over the four years from 1968–69 to 1971–72.
There is also provision, should this be needed, and subject to the approval of the House, to convert a further tranche of borrowings of up to £12½ million into a special account on 1st April, 1972, to support B.E.A.'s revenue accounts over the three years 1972–73 to 1974–75.

Mr. Nicholas Ridley: What could the second tranche of £12½ million be needed for? Presumably, the costs of the introduction of the Trident have already been assessed and added. What is the need for a possible further £12½ million at some stage in future?

Mr. Rodgers: I hope I shall answer the hon. Gentleman during my speech, but if not I will try to give him more detailed information when I reply to the debate.
At the same time, we seek power to introduce an element of public dividend capital into B.E.A.'s capital structure on or after 1st April, 1972. Finally—and this is important—the Bill provides that the Government should have the power from 1st April, 1972, to require B.E.A. to surrender any sums in reserves which appear surplus to requirements or to convert such sums into interest-bearing redeemable loan capital.
We reached agreement with B.E.A. on this form of assistance because it is consistent with the concept of B.E.A. as a commercial undertaking—in contrast to a morale-sapping general subsidy. It achieves the underlying aim of avoiding an accumulation of substantial losses; it can be readily identifiable in B.E.A's accounts and involves no fresh outlay of Government funds. Instead the National Loans Fund forgoes interest on and redemption of the loans involved.
We decided that the course consistent with the pledge was to assess the amount needed to give B.E.A. the opportunity of achieving profit margins, after payment of interest charges, sufficient to allow

modest appropriations to reserves. B.E.A.'s forecasts over a ten-year period were the basis for this calculation. These showed a prospect of continuing losses until 1974–75 with profits thereafter which we considered to be adequate for commercial viability.

Mr. Cranley Onslow: When were these forecasts formulated?

Mr. Rodgers: I like to give way to help hon. Members, but I shall cover that point in my speech as well.
We were conscious of the special difficulty of forecasting in the airline operating business, which is prone to unpredictable troughs and peaks owing to vulnerability to political and economic developments in the international market it serves. The fallibility of forecasting is not peculiar to B.E.A. I noticed, for example, in Flight for 26th December last that B.U.A. was able to forecast a profit for the year 1968 and a larger one for 1969, whereas a year previously it had been expecting losses of over £1 million in each year. However, on all the information available at the time, we assessed £35 million as the amount required to afford B.E.A. the opportunity of achieving the profit margins I have indicated.
In view of the inherent uncertainties in forecasting so far ahead, the Government decided that the figure of £35 million should be divided into two tranches; £25 million to cover the period until 1971–72 and up to £12½ million—the additional £2½ million being in recognition that B.E.A. will be paying interest on the second tranche from April 1968 until April 1972—to cover the following three years if these should turn out to be necessary. Waiver of interest on these sums amounts in a full year to £1·4 million on £25 million, rising to £2·1 million if the second tranche is required.
The scheme allows for incentives to B.E.A. to improve on its forecast results. In the first place, the transfers from special account to revenue accounts will be pre-determined. The instalments have been agreed with B.E.A. and they are £5 million in 1968–69, £4 million in 1969–70 and £8 million in each of the last two years. If B.E.A. achieves better results than forecast, these transfers will not be reduced on this account. Instead, B.E.A.'s reserves will benefit.
Secondly, Sir Anthony Milward has accepted the challenge of so improving over forecast during the first four year period as to be able to manage without the second tranche of assistance. If B.E.A. succeeds in attaining this objective, the Government have undertaken to consider the possibility on or after 1st April, 1972, of giving it some public dividend capital. This will depend on B.E.A.'s financial prospects at the time and on the outcome of the experiment with B.O.A.C.
The Bill also provides for some recompense to the State if B.E.A.'s future fortunes should justify it, in that, on or after 1st April, 1972, the Government can require B.E.A. to surrender any sums in reserves which appear surplus to its requirements or to convert such sums into interest-bearing redeemable loan capital. This is the provision for "clawing back".
I am glad to say—and I hope that the House will be pleased too—that, since the settlement was announced nearly a year ago, B.E.A.'s financial results and prospects have somewhat improved. The accounts for 1968–69 have not yet been finalised or audited but B.E.A. tells me that provisional figures indicate that the profit for the year, after crediting £5 million from the special account and after allowing for some additional provision for depreciating aircraft shortly to be phased out of service, could amount to some £3 million. This is an improvement of rather more than £1 million over the out-turn assumed last year and the outlook for the next few years also looks more promising.
This can be largely attributed to an improving rate of traffic growth for operators generally—one example has been a higher level of holiday traffic, helped by the experimental winter tariff. B.E.A. has secured a share of this growing market. Its management effort will continue to be directed towards attracting more traffic, reducing costs and increasing productivity.
But I am certain—and I emphasise this—that this more encouraging trend is no reason for going back on our promise of last July to give assistance as provided in the Bill on the strength of which B.E.A. placed its order for Trident 3Bs. B.E.A.'s objective of managing without the second tranche could not be achieved without improving on last year's forecasts,

and for the first year of the period they seem to have moved towards attaining the required measure of improvement. As I say, the prospect is better but forecasting remains an art, not a science. We cannot be quite sure which way the cookie will crumble.
But one consequence of this improvement in prospects is that we have been able to set a financial objective, in agreement with B.E.A., at a higher level than would otherwise have been reasonable a year ago. On the basis of current expectations and the present organisation of the industry, we and B.E.A. believe that it should be possible for the Corporation to achieve an average of 8 per cent., after aid but before charging interest on borrowings, on net assets over the four-year period 1968–69 to 1971–72. It seems likely that the return in 1968–69 will turn out to be somewhere in the region of 5 per cent., so the House will appreciate that B.E.A. will need to do well over the next three years if it is to succeed in raising the average to 8 per cent. over the period as a whole. This 8 per cent. target, which is rather higher than B.E.A.'s current estimates indicate, is consistent with the Select Committe's views on the financial objective as a realistic assessment of what a nationalised industry can be expected to achieve, assuming that appropriate investment and pricing policies are pursued with maximum efficiency. We have agreed with B.E.A. that we should jointly review the 8 per cent. figure in a year's time to see if a change should be made in the light of the out-turn of this year's operations and any decisions following the Edwards Report.
There are two more provisions in the Bill to which I should refer. The first relates to B.E.A.'s borrowing powers. At this time last year, my right hon. Friend introduced a Bill, now the Air Corporations Act, 1968, to increase B.E.A.'s borrowing limits to £210 million, rising, subject to the approval of the House, to £240 million; and to confer on B.E.A. the power to borrow within these limits, and the Board of Trade to lend, sums required for financing any deficit on revenue account up to £10 million accumulated by March, 1970.
This deficit financing power was precautionary and has not been used. With the financial assistance granted under the Bill, the power will no longer be required


and is consequently repealed. B.E.A.'s borrowing limits are reduced by the same amount to £200 million and £230 million respectively and these limits are expected to be sufficient to meet B.E.A.'s requirements to the end of 1973, taking account of the fact that their existing level of borrowing against these limits is reduced by the Bill.
The second provision is intended to bring both B.O.A.C. and B.E.A. into line with other nationalised industries by empowering the Board of Trade to require their Board members to disclose any financial or other interest likely to affect their functions as Board members. This provision should, I believe, be particularly non-controversial.

Mr. Hugh Jenkins: Would I be right in thinking that this provision does not apply to the British Airports Authority, and should it not apply, having regard, for example, to the longstanding connection between the Chairman of that Authority and Beagle Aircraft Corporation, for example?

Mr. Rodgers: That is quite a different question. The Bill involves B.E.A. and I regret that my hon. Friend has used the opportunity to make remarks which I think are inappropriate to the Bill but which I should be very glad to deal with on a future occasion. Although it would be unfair for any implications to be attributed to what my hon. Friend said, he will appreciate that now is not the time to debate Mr. Peter Masefield. Although that second additional provision may not entirely satisfy my hon. Friend, I think that it will be acceptable to the House as a whole.
The objectives of the Bill are, I believe shared by the whole House and its terms follow my right hon. Friend's Statement of July last, which was welcomed. If there are any further points on the Bill, I will do my best to answer them at the end of the debate. Meanwhile, I commend the Bill to the House.

4.46 p.m.

Mr. Cranley Onslow: The last time we debated B.E.A. was almost exactly a year ago, when the Minister's predecessor said:
Obviously Parliament will not wish to have presented to it a series of civil aviation measures,

each modifying the previous one."—[OFFICIAL REPORT, 4th April, 1968; Vol. 762, c. 700.]
To the extent to which the present Bill removes that need, we must certainly welcome it. It is not a controversial Bill, although we may have some reservations about its timing. After all, we have had to wait nine months for it since the President of the Board of Trade made his statement on 10th July. This may be the normal striking pace of this Government, but it is a long time.
It is a shame, however, that it could not have been just one week more, since then we would have had the advantage of having the Report of the Edwards Committee, which I understand is due for publication on Monday. Why this timing has been forced upon us I do not know. It may be that the organisational genius of the Leader of the House has contrived this situation, but one must also remember, I suppose, that, originally, it was forecast that the Edwards Committee's Report would be available in the spring of 1968.
In one sense, the Bill is still something of a stop gap Measure. Although it finally disposes of the consequences of decisions, dating back to August, 1966, that B.E.A. should not purchase American aircraft, which were welcomed by the whole House at the time, a good deal remains uncertain—not simply the effects of the Edwards Committee's Report and subsequent legislation on the future structure of B.E.A., but also the extent to which all the powers which the Bill provides may ultimately prove necessary.
The Minister said that there was considerable room for reconsideration of past forecasts in this respect. We may well want to consider this in Committee. After all, we know that there must be at some time in the next two years, one trusts at least, a major civil aviation Bill to cover the whole field, although I doubt whether it will fall to the present team to introduce it. It is of some advantage that we have been obliged to wait, because it should enable us better to test, in the light of experience, the validity of the forecasts on which the Bill's calculations are based. It looks as though we may hope to discover in Committee from the Minister that some of the forecasts which were made pessimistically


have been improved upon with the performance of the past year.
The prospects of B.E.A. have altered in the past year. The likely original loss for 1968–69 seems to have been reduced by about £1 million, which is a considerable achievement. It is particularly noteworthy in the context of remarks by Sir Anthony Milward in the B.E.A. newsletter on 1st January, 1969. Speaking of 1968, he said:
In retrospect, the year proved a better one than was at one time feared.
In the light of some of the "difficulties, disappointments and disasters" which befell B.E.A. in 1968, one is bound to express one's gratitude that such a good result has ultimately been achieved. Sir Anthony mentions the decision not to proceed with the BAC 2–11, the increased landing fees at Heathrow, the crash at Heathrow which deprived B.E.A. of two of its Tridents at the peak of the season, the "miserable restrictive" travel allowance, the strike in France, the industrial troubles at Abbots-inch and the "valuable planning time" taken up by the European air bus negotiations which produced no result except that the future of the BAC 3–11 now looks "considerably brighter".
As I said, we shall need to test the calculations in Committee. However well they may have been worked out by the Board of Trade and B.E.A. together, Parliament still has a right to be informed and a duty to insist on information before approving the expenditure of public money.
In that context, I would remind the Mininister of the exchange that I had with him at Question Time on 11th December last, concerning the basis of the calculation. I asked him whether he agreed that Parliament was entitled to ask for the necessary explanation and that the necessary explanation would be given. The somewhat eliptic answer that he gave was that he was sure that Parliament was entitled to ask for the information. Perhaps it was accidental, but he did not say that the necessary information would, of course, be given. When we come to the Committee stage, I hope that we can go some way to satisfying the legitimate requirements of Parliament on this issue. I have no desire to insist upon the publication of information which would put B.E.A. at a disadvantage in its operations

in terms of its competitors. It would be no wish of mine to try to drag out of anyone information which would do B.E.A. damage. However, this is an issue upon which the members of the Committee should be informed and, if it cannot be done in the conventional process of exchange across the Floor of the Committee, I still hope that a way round this difficulty will be found.
The Committee will also want to know what have been the detrimental effects of the past year and what are the prospects of the coming year for B.E.A. It now faces unexpectedly increased costs in certain areas. Increased air navigation service fees have been announced and are the subject of a Prayer which I hope that we shall come to in due course. I will not enlarge upon it at the moment, except to say that the result will be that a good deal of money will have to be spent by B.E.A. which it could not have budgeted for originally. No doubt there are other effects of the latest Budget, including the prospective increases in National Insurance contributions, which will put additional burdens on the operation of the Corporation.
Another offsetting factor about which we would like some information is how the aircraft coming into service with B.E.A. are performing. I am thinking of the Trident 2, for example, which has been in service for almost exactly a year—the first was delivered, I think, in April, 1968. It could not have had its performance taken into account in the forecasts made except on a purely guesswork basis. I want to ask the Minister if he has any reason to suppose that the original forecasts of the operating performance and passenger appeal of the Trident 2 were again pessimistic ones. We remember with some distress the way in which the attractions of the VC10 were written down by B.O.A.C., the pesimistic forecasts of its profitability that were pat about the world and the resulting damage to the manufacturing industry. We should not do the industry any service by ignoring the possibility that, in operation, the Trident 2 may prove to be a much more attractive aircraft than cautious forecasts originally suggested.
Such inquiries as I have made lead me to suggest that it is drawing in a considerably higher load factor than originally estimated. If we ignore that, we are not


just ignoring a fairly vital part of the whole equation but playing down the value of the products of the British manufacturing industry in not going out of our way to establish where they beat their specifications and forecast performances. In due course, if the Trident 3 also provides a bonus in this way, we should be prepared to recognise it when it comes and to consider how far the calculations in this Bill can be revised in terms of the second tranche of £12½ million. By the time that consideration of the payment of that tranche comes due, I hope that we may be able to say that nothing like £12½ million will be required.
I want now to refer to some other aspects of B.E.A.'s operations. I have no intention, Mr. Speaker, of testing your generosity by seeing how far we can range over the whole of aviation. I think that we were taken by surprise on the last occasion when the President of the Board of Trade launched us on a major civil aviation debate when most of us expected to be talking only about B.E.A. The debate may widen itself, but I do not seek to extend the bounds of order.
There are some matters concerning B.E.A. about which the House could usefully be informed. One is the status and profitability of its two subsidiary companies. I refer to the two wholly-owned subsidiaries of British Air Services Limited, in which B.E.A. holds 70 per cent. of the capital. They are B.K.S. and Cambrian. I do not know how they are going. I do not know whether they have any future aircraft equipment plans. I hope that they are not thinking of buying American aircraft. The House will welcome any more information about them when the Minister comes to wind up the debate.
It will also welcome information on the extent to which B.E.A. contemplates using its resources over the next few years to invest directly or indirectly in the hotel business in this country. The Minister spoke of B.E.A. having the opportunity to put certain sums into reserve. It was not clear whether he meant that B.E.A. could make use of those sums not to increase its reserves but to increase its capital investment in other areas of activity.

Mr. Ian Mikardo: It would be a good idea.

Mr. Onslow: The hon. Member for Poplar (Mr. Mikardo), who is always anxious to diversify public corporations, says that it would be a good idea. I would be delighted to have a long doctrinaire debate with him about that, but I will not detain the House now.
In the context of this Bill and the arithmetic in it, we had better know what plans B.E.A. is committed to or is considering in terms of investment in the hotel industry. I would not promise those plans the uncritical and cordial welcome that the hon. Member for Poplar would accord them in his capacity as Chairman of the Select Committee on Nationalised Industries.
Another important aspect of B.E.A's operations is the Highlands and Islands service. I understand that it is a point on which the Edwards Committee has been asked to report. In view of that, it is perhaps premature to say anything much about it now, but when we are considering B.E.A's finances over the next few years, I think that we ought to consider whether this service, with its strong element of social need, can be justified on the present financial basis. Should it not be treated on a par with other transport services where there is a direct subsidy accruing to the operator concerned? This has always been treated as difficult, if not impossible, in the past, partly because of the obstacles to isolating the costs of the operation. The fact that B.E.A. has now established a separate Scottish division may make the accounting process somewhat easier. Certainly I feel that we ought to ask ourselves, if there has to be some element of subsidy in the operation of the service, whether it is wholly appropriate that it should come from B.E.A's passengers on other more profitable routes.
Then there is the position in relation to borrowing abroad. I understand that B.E.A., like B.O.A.C., has moved into a policy, no doubt with Government approval, of financing some of its needs by raising loans on foreign markets. It seems to me that we ought to have an opportunity to examine the effects of this, if nothing else. Where this happens, we are to an extent pre-empting future foreign exchange earnings and mortgaging future sterling balances. I am not sure that I am convinced it is a wholly good idea to be doing it, nor


do I know how far the Government intend that financing of this kind should go.
B.E.A. has also announced plans to set up a separate charter company. I do not know that this is necessarily the best thing. No doubt we shall be able to test it in due course against the recommendations and findings of the Edwards Committee, although one of the few leaks which has come from Edwards suggests that the Report will not necessarily favour this operation.
I turn now to the question of other capital investment in necessary services, particularly investment in the cargo terminal being put up jointly with B.O.A.C. at Heathrow. I saw it with other colleagues the other day. It is a highly sophisticated and necessary piece of equipment which amounts to a real recognition of the growing importance of air freight in the air transport business. It is highly capital-intensive, but at the same time it brings out a peculiar problem in modern industrial relations. It looks to me as if the few men who will be employed in operating that cargo terminal will have great industrial power in their hands. It looks as if here, once more, we are having a new nerve point created in the economy where irresponsible industrial action can deliver a sort of karate chop to society. Industrial relations in B.E.A. are not bad. I had better not say more, because it might have the wrong effect. But certainly their record in the past has not been amongst the worst in British industry.
To digress for a moment, may I say, in the presence of the Chairman of the Select Committee on Nationalised Industries that, as an ordinary member of this House, it seems to me that there is a case for that Committee considering the state of labour relations in the nationalised air corporations. If it could do this, it should have the effect of adding to the status of Parliament and proving the flexibility of the Committee. I think that it would also produce a kind of informed report, which is extremely difficult for the House and the public to obtain by any other means. Happily there appears to be no immediate crisis in either B.O.A.C. or B.E.A., but it may be that this would make such a course of action the more appropriate at this

stage. I merely throw out that suggestion as an ordinary member of this House, in the hope that, the members of that Committee will give it some consideration.
Turning to the longer term re-equipment problem of B.E.A., which must be very much in our minds, I do not think that I can say that the Government have been wrong in the way that they have handled the questions which have so far come before them on the airbus or the BAC311. I am not sure that they have been right on purpose. I have a feeling that some of the skill we can detect in retrospect may have been inadvertent unless they were quite Machiavellian in their insistence on getting 75 orders for the airbus by last July, which everyone knew to be impossible, and unless they foresaw the possibility that the RB207 engine could never be built by Rolls-Royce because the resources involved would not be available if their hopes for the R B211 bore fruit. Whether they have avoided error on purpose or by accident we are in a situation where the important and correct decision still remains open to be taken.
I think that we must express it in this way. The apparent willingness of the French and Germans to continue with the A300B makes it clear that this is a politically motivated aeroplane. As such, it is not one that should interest us. We ought to be thinking of commercial and internationally competitive aeroplanes for our industry to build.
The BAC311 still shows every sign of being just that, particularly when we take into account the balance of payments burdens which would be involved in massive purchases of American aircraft which have already and rightly, proved so objectionable to the Government. We are, of course considering a Bill today which arises from a similar danger. I hope that we shall see Government interest in the BAC311 continue. I hope that we shall not see the dead hand of the Treasury economisers fall on the project. I believe that this aircraft offers great potential and the only real prospect of continuing the situation where B.E.A. flies British right through to the end of the 1970s.
The aviation industry is, we must all hope, expanding. As a nation, we ought to be aiming to increase the British share


of this major international activity and to derive increasing profits from it. When Edwards reports next week I hope we shall find his committee has had the courage to diverge a little from its somewhat negative and introspective terms of reference. Looking back now we can see that they would have been much improved had they had words included, "To maintain and, indeed, to increase the British share of the international aviation market." But to do this we have to be sure that the capital will be there. When we consider the longer term effects of the Bill we must satisfy ourselves whether the proposals for Treasury equity and the continued existence of a measure of Treasury control will ensure this. I realise that we will have to consider all this further in the light of what the Edwards Report says. However, when we come to consider that report we ought not to forget that other nations have developed different approaches to the business of competition in the aviation industry. For example, K.L.M. and Lufthansa, which do not finance themselves in precisely the way that we now find our nationalised industries financed and whose methods of maintaining themselves as efficient competitors in aviation certainly should not pass without examination. Looking at Lufthansa's performance on the North Atlantic, it would be very interesting to know why it gets the good results that it does.
When we approach the Edwards Report, we should not dismiss from our minds, from any purely doctrinaire reasons, the possible benefits which may accrue from measures which will have the effect of attracting private capital participation into operations of this kind. In the long term all depends on the environment. This is why the reform of the environment is the most important task which will face us when Edwards reports. This concerns the future of the A.T.L.B. which one Committee of the House has recommended should be abolished, but which I prefer to see very much strengthened. We have to wait for Edwards but we must go into the future of aviation with a mood to compete, to expand and to recognise that this is the sort of progressive economic activity to which our nation is particularly suited. We must not be tempted to yield to the

dangers of what I should call, to give it a pseudo-medical name, the "Foulness syndrome" which simply leads people to suppose that if aircraft cannot be uninvented at least they should be banished as far from sight and sound as possible, totally regardless of the economic consequences involved. That sort of attitude will not help us or B.E.A.
In closing I should like to pay tribute to B.E.A., to Sir Anthony Millward, who is now entering his last full year of office and to whom the country owes a debt for the way he has fought and continues to fight for British aviation, to all the staff, the pilots, the cabin staff, the ground staff and to all the employees of B.E.A. at home and overseas. We should not allow ourselves to forget the importance of the contribution which the latter make.
I was recently the guest of B.E.A. on a Trident 2 inaugural flight to Tel Aviv. I hope the House will not misunderstand me when I say that I could not fail to be impressed by the standard of the service. But, rather than ask the House to accept a compliment which it may regard as somewhat prejudiced in this respect, I should like to quote part of an advertisement which I saw during that flight in Time magazine. It reads as follows:
B.E.A. is a superb way to fly.
If it wasn't, we wouldn't waste
our own space saying so.
B.E.A. did not pay for that advertisement; that makes it all the more worthwhile. It was paid for by one of B.E.A.'s competitors and it was a tribute such as we must all wish to see continue to be paid to this important section of our aviation industry.

5.10 p.m.

Mr. Ian Mikardo: I begin by commenting on three observations made by the hon. Member for Woking (Mr. Onslow). I first associate myself, and, I am sure, with myself most, if not all, hon. Members, in the tribute he paid to the work and progress of B.E.A. It has some defects, and the Select Committee drew attention to them, but with all those defects it is still a pretty good advertisement for British initiative and enterprise.
Second, I listened with interest to the suggestion the hon. Member made that the Select Committee on Nationalised Industries might take a look some time at


the broad question of labour relations throughout the public sector. I entirely agree with what he said, and I am grateful to him for having said it. When a few months ago the Select Committee was considering its programme for this Session and choosing subjects to investigate, I took the liberty of suggesting a number of possible topics. One was an inquiry into labour relations, but the Committee in its wisdom chose one or two others as more urgent and interesting. I hope that the Committee will come back to consideration of this matter in the next Session, and I hope that it will be influenced by what the hon. Member was kind enough to say.
The third point has reference to the Air Transport Licensing Board. The hon. Member said he did not agree with the Select Committee's suggestion that it should be abolished. Has he read the transcript of the evidence in which witnesses from the board appeared before the Committee?

Mr. Onslow: I hope the hon. Member will not misunderstand me. I should like to see the Board reformed. I should like the average age of some of its members reduced. I should like to see it given real powers, and staffed by men positively seeking to maximise the opportunities which exist in this industry in this country.

Mr. Mikardo: The Committee formed the impression that the average age of its members might with advantage be reduced. I formed the impression—and here I do not speak for any other hon. Member—that their competence could be considerably increased, but one also got the impression that they were trying to do something which could not be done in that way by that sort of instrument. If one reads the transcript one sees that it is a piece of comic literature which does not give one any confidence.
I welcome this Bill. I express thanks to the Minister, which I am sure are shared by all the teeming multitudes at present in the Chamber, for the speech he made. It was a most helpful, informative and clear exposition of the Bill and its purposes. I want to comment only on Clauses 1 and 2. My comments on Clause 1 are highly interrogative and designed to get the Minister, when he

winds up, to say more on one or two points which would make his ideas and the ideas behind the Bill even clearer than he has made them.
I begin by way of preamble by referring, as the Minister did, to the examination of B.E.A. by the Select Committee. We gave B.E.A. generally a clean bill. We referred to some defects, and I am greatly impressed by the very fair-minded attitude which the Corporation has taken in its reply to our Report and the criticism we made. It has not been defensive. It has been gracious enough to admit error here and there and to say that it will try to put the error right. The Corporation gave the Committee every assistance and came out of the whole matter extremely well. But the Minister will know that the general theme of the Committee is that while, of course, it must be, and must remain, true that in the end the Government must have the power to decide in the overall national interest that a corporation ought to do something which is not strictly commercial on its own account, when the Government make such a decision they should bear the cost and responsibility of that decision.
So far as it is possible the extra burden imposed by that decision should be isolated and quantified. It should be borne, as the hon. Member for Woking suggested, not by the passengers but by those who have made the decision and those in whose interest the decision has been made. What the Committee has never liked—this goes back to long before the time when I was associated with it—is that the effects of non-commercial impositions upon a public corporation should be blurred and hidden away in some general overall sum, call it subsidy or whatever one will, so that it is impossible clearly to allocate responsibility and impossible to say how far the operations of the corporation are being carried out efficiently because the picture of that efficiency is blurred by this overall degree of subsidisation.
My feeling about the relationships between the Government and public corporations—the Select Committee brought this out in its major report on the general relationships between Government Departments and public corporations—is that the relationships ought to exist in this way: "I, the Minister, can instruct you, and will instruct you, to do things


you may not want to do in your commercial interests. We shall quantify how much those instructions are costing you. I will pay you that amount. I will be, so to speak, your customer in the provision of those services which I am requiring you to provide, having been your customer and having paid you your just price, as to all the rest you jolly well have to operate on a commercial basis because you have no excuse for not doing so. You cannot say afterwards, Minister, we made a loss this year but this was your fault because you compelled us to do this, that or the other' because the answer will be, 'I paid you to do what I wanted you to do.'"
This is what I mean by sharply dividing responsibility between Minister and corporation. Let each bear his own burden. Then we can see to what extent each is carrying out properly his own functions.
This is interrogative. I am not arguing and debating sideways. This is a request for information because I am not clear about it. I ask the Minister how far this £25 million, if it is ever called upon, and the subsequent slice of £12½ million—I hope the House will not think me eccentric in using the English word "slice" rather than the French word "tranche"—measures up to this criterion of not being a blurring factor. How will these amounts be settled? Will the payments out of this fund cover all losses, or will they cover only the losses directly attributable, as the Minister described them, to the delay in carrying into service the new Tridents and the BAC 111 500s? I would not want a situation to arise in which the waiver of interest about which the Minister told us constituted a hidden and, above all, unidentifiable subsidy. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) made a pertinent intervention when he said that the one thing which the second slice cannot be is compensation for delay in bringing these aircraft into service because by then they will be well and truly in service. This process has wide implications for the new financial objective about which the Minister told us.
I make in all friendship a small criticism of the Minister's speech. In that part of his speech in which he spoke

about financial objectives he did not appear to have kept up with the most modern thinking about the financial control of nationalised industries. The 1966 White Paper on financial control of the nationalised industries, although it is highly ambiguous, as almost all Treasury White Papers are—some passages can be read to mean anything that anyone wants them to mean—said, "We have been grossly wrong in the past in thinking of the financial objective as the sole instrument of financial control. We should be pretty wrong in thinking of it as a major instrument of financial control. We should be wrong to some extent in thinking about it as a realistic instrument of financial control."
That White Paper pointed out that there are three interlocked factors which affect each other—the pricing policy, the rate of discounted return on new investment, and the overall financial objective—and that the fixing of any two of these will residually automatically fix the third. Although there were some reservations, the White Paper came down on the side of making pricing and investment return the operative factors and the financial objective only the residual factor. I detected in the Minister's observations a departure from that point of view. If I am wrong, I shall be delighted to hear it.
I turn to Clause 2 and make some observations about the introduction of Exchequer dividend capital. When I got my copy of the Bill and read that the Government proposed, doubtless on the advice of the Treasury, whose advice is always operative in these matters, to introduce Exchequer dividend capital in B.E.A., I was more excited than I had been in all my 20 years' membership of the House. That wild excitement was due, not to my belief that there was something wonderful about having Exchequer dividend capital in B.E.A.—it is not bad, it does not do any harm, but there is nothing marvellous about it—but to the fact that for the first time in my 20 years I had evidence that the Treasury was prepared to admit an error.
When we were examining the Treasury witnesses in our inquiry into B.E.A. we had the temerity to ask them why they thought it right to have Exchequer dividend capital in B.O.A.C. and not in B.E.A. They told us that they applied three criteria


in deciding whether any corporation should have Exchequer dividend capital. They said that all three criteria applied in B.O.A.C. but not in B.E.A. There follows in the transcript of the evidence another piece of ripe comic literature. If the Minister is looking up the reference, I can help him. It is Question No. 265. In cross-examination it became evident that not only was it not true that the three criteria which they applied operated in B.O.A.C. and not in B.E.A. but, that they operated more in B.E.A. than in B.O.A.C. It seems that the Treasury was influenced by that little passage of arms. What I find exciting is the revelation that it is possible to make a microscopic dent in the Treasury's permanent assumption of its own monumental infallibility. I welcome the change of heart—"There is more joy in Heaven over one sinner that repenteth …".
The Committee did not think—and I share its view—that the introduction of Exchequer dividend capital makes a great difference. It may make a psychological difference, and, to be fair to B.E.A., that was the ground on which, as a second line, it argued it. I do not ignore the fact that psychological factors are important in running an operation. B.E.A. made a chump of itself in the first place by trying to bargain acceptance of aircraft which it did not want against Exchequer dividend capital, which was a nonsensical thing to do. The Committee said that it was nonsensical, and I am delighted to see that B.E.A. has admitted that we were right. It spoiled its case, such as it was, for Exchequer dividend capital by linking it to something to which it was not relevant. Now that it has come, so be it. I do not want to see too much made of it. In the end, the criteria for control should come not out of this sort of thing but out of the more sophisticated instruments of control to which I have referred.
I welcome the Bill. I hope it will enable the Corporation to make even better progress than it has made in the past.

5.28 p.m.

Mr. Nicholas Ridley: I agree with all the points which the hon. Member for Poplar (Mr. Mikardo) made, except one. I agree that we can all rejoice that the Treasury changed its mind over Exchequer dividend capital. However, I feel that it

did so in the wrong way and that it might have been better if it had decided to abandon the experiment for B.O.A.C. and not introduced it for B.E.A. The Second Report of the Select Committee on B.E.A. in 1967 said:
If one of the three methods is to be chosen, the method (advocated by B.E.A.) of capital reconstruction with an element of Exchequer dividend capital similar to that of B.O.A.C. appears to Your Committee unsuitable.
Although I was not a member of the Sub-Committee which made the Report, I feel that there is something bogus about Exchequer dividend capital and that when it is coupled with writing off a large chunk of debt it is even more misleading. It is possible, as B.O.A.C. has done, to pay a very large dividend on the Exchequer dividend capital, because the interest does not have to be paid on the debt which was waived. I think that in the case of B.O.A.C. it was £110 million. This gives a false impression as to the profitability of the airline, which may be good for the morale of those who work in it, but is less good for the morale of the taxpayers who are carrying the interest burden on the £110 million.
The Bill represents a further injection of subsidy into our two Corporations. In 1952 we injected £60 million; in 1968, I think, £110 million; and in 1969 the Bill proposes as much as £37½ million more, making a total of £227 million subsidy on capital account.
We should take a look at airlines in other parts of the world which have got through this, admittedly difficult, 20 years with much lesser sums in subsidy, or none at all in some cases. The House should muse a little as to why this has been necessary. I am sure that the greatest reason—and I shall mention three—is the question of buying aircraft. In so many instances we have bought unsuitable aircraft, which not only cost more to buy but very often cause large losses because they are unsuitable for the task for which they were bought. It is a pity that the VC 10, the Vanguard and the Trident have all proved not to be world sellers.
The time has come when we should consider whether it is the right policy to require the nationalised air corporations to commission and tailor-make aeroplanes from British manufacturers which are


suitable to what they imagine to be their own needs. I do not say that the Government should not assist the British aircraft industry. I shall say in a few minutes how I think they should do so. But we must keep the boundaries of responsibility much more clear. If we tell airlines to make money in the business of carrying passengers, we give them a clear definition of what they are to do. If we tell aircraft manufacturers that they are to make money in the sale of aircraft, they also know what they are to do. The market for aircraft is world wide, they should do their market research world wide, design their aircraft for world markets and sell them in the world market.
The airlines, so far as I can see, should confine themselves to choosing in the world market that aeroplane which is most suitable and which is on the market, for the task they have in mind. This would enlarge our operations, and although we might buy more foreign aircraft I believe that we would also export more British aircraft, and the foreign exchange plusses and losses would balance out. At present we have a situation in which we are locked into a narrow protectionist view of the matter, which in the long run could well result in the strangulation of the British aircraft industry.
If the Government wish to subsidise the aircraft industry as a whole, or any particular aircraft, they can still do so by giving the industry or that aircraft special aid. But I am sure that the decision as to what aircraft to buy should be in the hands of the airline corporations and not in those of the civil servant, who probably does not know so much. If he does—and here I use the phraseology of the hon. Member for Poplar—he should be employed by the airlines and not the Board of Trade.
I think that we have also been wrong on the question of uneconomic routes. The duty of airlines should be to make money in the operation of their passenger and freight aircraft. If they have a route that is uneconomic there is no doubt in my mind that they should refuse to continue to operate it unless they are specifically rewarded for the loss by whoever wants it done, whether the Government

or somebody else. B.E.A. is operating at least two routes at a loss—the Highlands and Islands network and the Berlin-Hanover route, which I happen to know does not pay.
If the Government want B.E.A. to continue to operate those routes it should not twist its arm or adjust its capital, but should ask, "How much do you want to run these routes?". If the reply is a sum that they think worth paying, that amount should be paid openly and annually to the airline. I realise that that gives the airline an opportunity to blackmail the Government. It could say that it would not fly to the Highlands and Islands unless the Government gave it such large sums of money that it would be making an unnecessarily large profit. That is why I believe that we need competing alternative airlines, so that if one takes the Government for a ride the contract can be given to another airline. There should be as many as three or four alternatives who can take up such contracts, one in competition with the other.
A third area in which I think we have been doing the wrong thing concerns the veiled reference to earning dollars made by the Minister in his speech. The subsidy to British airlines is often justified with a sort of undefined comment that they are major earners of foreign exchange, and that in a situation of financial crisis, such as we have permanently, it is wrong for anybody to question anything that earns foreign exchange; that it must be right. I want to question this assumption.
The price we must pay for earning foreign exchange depends on how much we are in debt and what our balance of payments is. But it may well be that rather than by investing another £37½ million into B.E.A., if we put that money into agriculture we might save more foreign exchange. To take another example, we have just put £40 million into an aluminium smelter which will certainly save foreign exchange, but may be a very high price to pay for it.
But in all these questions of how much foreign exchange we shall save by any particular subsidy or Government policy, we should assess what we are putting in in terms of subsidy in order to achieve the foreign exchange. In other words, we


should put a price on foreign exchange; we should have a premium as to what it is worth our while in investment or subsidies to achieve a given quantity of foreign exchange.
In all this, it seems to me that airlines are not for earning foreign exchange, nor are they for promoting the British aircraft industry, nor are they for subsidising remote districts and areas which cannot economically maintain an air route by the strength of traffic which they generate.
These are perfectly legitimate objects of Government; to bolster the aircraft industry, to provide a service to the Highlands and Islands, or to earn foreign currency reserves. But in all cases the Government should require the airlines to be entirely commercial and to resist pressure to do things of this sort unless they are openly and suitably rewarded in the way I have indicated.
I ask myself how other airlines cope with these problems because they are not singular to us. I visited both K.L.M. and Lufthansa, and had the honour of long discussions with the directors and some of the officials in each of these airlines, when I discussed the very questions we are now discussing. They both said that this sort of interference is intolerable, that it makes it quite impossible to run their businesses if they are always going to be told what aircraft they should have, where they should fly to, or how they should raise capital and things of that sort. They said that it is a very competitive, very difficult business, that they have managed to pull Lufthansa and K.L.M. into the black out of loss situations, and that the one essential they have insisted on with their Governments is that the Governments stop interfering. The President of K.L.M. went so far as to tell me that the airline was in such a financial state that he was able to make his own terms. He is a distinguished industrialist and was able to say to the Government "I will not take on the Presidency of the K.L.M. unless you give me everything I want". They were so desperate that they agreed.
He said that the need to insulate the airline from the interferences of Government was so great that one could not trust good intentions, however much the Government of Holland, or indeed the Government here, might say "We have

finished interfering. We are not going to tell you to do any more of these un-commercial things ever again". When chairmen of airlines had lunch with the Ministers there was no directive, but those subtle pressures, which those who have been in politics for a few years understand better perhaps than those who have not, began to be exerted.
The President of K.L.M. said "In order to make sure that you do not interfere with me and make me do uncommercial things, but allow me to run my airline according to my best commercial judgment, I want there to be a few other owners. I want a few other people who will be able to protest if I do anything which is not in their best interests." He insisted that half the equity shares were sold on the market to private individuals or companies of Dutch nationality in Holland. I do not know whether it was 49·5 per cent. or 50·5 per cent., but the fact is that an equity holding was introduced into both those airlines, as into other airlines on the Continent of Europe, in order to give a guarantee that other people will be involved if interference takes place.
There is one other advantage in this procedure. We know that the strain on our finances as a nation is becoming excessive. We know that one of the great difficulties in the future will be to raise these large sums of capital. The sums which are represented by this Bill, and by previous Bills, involve £227 million which has already been written off. This is as nothing compared to what we shall have to put in in future in terms of new capital.
Lufthansa airline and the Royal Dutch airline raised their new capital by means of rights issues. They simply say that all existing shareholders, Government and private, are able to take up their rights or sell them when they need new capital. Most of the new capital which has been put into our competitors in Europe has not come from the taxpayer, but from private investors. Of course, with an airline like K.L.M., which is half Government-owned, the Government must take up its rights or it loses control of the airline. Subject to what Edwards may say, and subject to all kinds of ifs and buts, I suggest that we should be wrong not to examine this sort of solution to the problems which beset British airlines.
I do not wish to be offensive, but I thought that there was a note of inevitability about the Minister's speech this afternoon when he said that this was a direct and foreseeable matter, indeed almost a consequence to be welcomed, arising out of the way we have run the airlines. There was no note of regret at all about the £227 million—which would be enough to float an enormous airline, a third airline on the world airline scene, or indeed to float a large company which could be situated in Scotland or in one of the development districts to manufacture and give employment. We must have regard to the value of the capital which we have written off over the years, and we must be careful that we do not commit ourselves in the future.
The argument of insulation against the effects of Government interference and the need to raise new capital are matters which are fundamental to the reasons why our airlines have not proved financially successful in the past. Whatever may happen in the future, this is a matter which from now on we cannot afford not to take up.

5.45 p.m.

Mr. R. F. H. Dobson: I have had the pleasure on a few occasions recently, both on the Floor of the House and in Committee, to follow the hon. Gentleman the Member for Cirencester and Tewkesbury (Mr. Ridley). He spoke of his solutions to some of these problems, and I was struck by what he feels to be the rôle of the public sector in the way in which it deals with its finances in the future. He knows from our previous discussions that I could not possibly agree with him on the matters about which he has talked, intriguing as they are and put forward in such an agreeable and lucid manner.
I thought that the hon. Member was unfair when he said that the Minister's speech contained a note of inevitability in regard to the future of airlines. As I understood my hon. Friend, he was saying that a guarantee had been given in the statement last year and that this Bill was a result of it. All the more credit to him, because in the interim period the finances at B.E.A. have improved above the forecast which was then assessed without substantial difference between the President

of the Board of Trade and the airline authorities themselves.
The hon. Member for Cirencester and Tewkesbury left out one part of the equation which was most important, namely the aircraft procurement programme. The part of the equation which he left out of his assessment is that no new aircraft can be built in this country without support on a massive scale by the Government of the day. This has been done not only by the present Government, but by previous Governments. However much we should like to see a change in that situation, one can never see it taking place because of the sheer practical conditions under which aircraft manufacturers work.

Mr. Ridley: I do not think I said that this should not be done, nor did I say that it could not be done. I said that it would probably still be necessary to subsidise British aircraft, but that it should be done in relation to an aircraft saleable in the world market rather than in the narrow market of the British Corporations.

Mr. Dobson: The hon. Gentleman is only saying what was said by the Plowden Committee in 1965: that where it can be achieved all aircraft projects should have a sale which is international.
The problem in practice is that it is most difficult to get into international markets. One can criticise previous Governments for not bringing the aircraft manufacturing people together early enough to make an impact in the way of British sales of aircraft on world markets. The hon. Gentleman is right to say that it is a difficult problem to solve in the way of aircraft procurement for B.E.A. and all other airlines.
The decision which was made last year, about which I had a slight reservation, to get B.E.A. to buy British was, in retrospect, quite right. It was right for two reasons. First, had it bought American aircraft it would have taken on a large capital debt which it is doubtful whether it could have solved, projecting it into these figures. B.E.A. might have got some improved operating from the aircraft in comparison with the Tridents, but it was right that we should meet the difference in the cost, if that is the particular problem which bothers B.E.A.
But that is not the full answer for the future. In one thing the hon. Member for Cirencester and Tewkesbury was right—that there should be more consultation between the airlines and the aircraft manufacturers on an aircraft which fits the bill for the routes which they have. The difficulty, of course, is that, in discussions of this kind, which are continual, both sides have different answers and sometimes some difficulty in assessing actual costs, rather than a rough "guesstimate". Nevertheless, there is a need to look to the future to see whether or not aircraft manufacturing policy relates to the needs of British aviation.
The point is now being met in part at least by the sort of marketing survey which B.A.C. has done for its 3–11. One might feel that some of its sums might be wrong—for instance, its penetration of the American market—but substantially what it is trying to do is to forecast the need for a British aircraft into the international scene, and to that extent the job should be useful to the Government.
But the hon. Member starts from a different position to mine. He feels that Government intervention is totally and wholly wrong and I do not. If the Government finance a publicly-controlled Corporation, we have every right at all stages to query, qualify, discuss, amend and generally process what the airline is doing within the sort of ambit of the President of the Board of Trade's authorities.
It is unfortunate that we did not have the Edwards Report before this debate, but if it does anything at all the Report should be so substantial—I hope that it will make some satisfactory changes—that we could not have had a debate next week or the week after to do justice to it. We have been cliff-hanging for the Report for a long time, and in such a major area of policy it will be looked for as the good Report which we have not had so far for the future of civil aviation.
I think that the hon. Member for Woking (Mr. Onslow) was wrong to suggest that Edwards could not look ahead. The terms of reference were clear and included the term:
… the prospects of the British civil air transport industry …
which gave it some authority to look ahead for the British share of world

markets, which is where we want to see developments.
The hon. Member for Cirencester and Tewkesbury—I hope that he does not think that I am picking on him, but he made an interesting speech—was wrong to write off the foreign savings from selling seats to people for dollars or other foreign currency. He is much more of a financial expert than I, but I think that he is wrong there, because he starts from the wrong basis.
The last B.E.A. Annual Report and Accounts is a valuable document, especially for its detailed information, but it has one major defect. In the review of the year and the look ahead, it seems to be pessimistic—I was about to say "anti-Government". It seems wrong for a public Corporation owned and backed by the Government to make continual references to Government interference and pessimistic statements about doing something or not being allowed to do something else, the economic crisis and the continuation of the overseas travel allowance, described as "a travesty of justice to B.E.A.".
That might be the view of some people, but it ill behoves a public Corporation to say these things in the way that they have been said several times. I would expect it from some independent travel and tourist operators, but when the Government technically own and finance the airline, help to run it and see it through difficult passages, as with this Bill, it is not a good idea to write such statements into the Annual Report, however much the individuals responsible may feel that they are true. But the information in the Report is absolutely superb: it could not be bettered.
On National Insurance, according to my calculations, in a total wage bill of £29 million for a year, possibly now increased to over £30 million, even if the insurance stamp were increased by a shilling, it would be an increase of £0·05 million, and, if it were two shillings, an increase of £0·1 million, which are derisory sums compared with expenditure of over £30 million.
The Report is very valuable for the background of this short Bill. The hon. Member for Woking said that there was a complaint about air navigation fees increases. I would have thought that


this was the wrong thing to do. There is a need to increase fees, because safety regulations for aircraft coming into British airports must be improved. If one can criticise British airports it is for the fact that very few are adequately equipped for modern aircraft, not only in runway length but by the navigational and other aids which they need. But I was very disturbed to read in the B.E.A. News of Friday, 18th April, that the lack of ground facilities at certain airports is holding up the blind landing and auto-land techniques.
I believe this is something which the Minister could usefully look at. We all know that the most dangerous time for aircraft in flight is as they land; and the object of automatic landing is to make that operation as safe as anyone can make it. It brings down the accident risk substantially. It enables aircraft to land automatically without risk to the passengers in extremely close weather conditions which otherwise would close the airfield or restrict its use. This system is valuable, therefore, from the point of view of reducing potential accidents to passengers and in relation to the ability of aircraft to land in bad or close weather, which may also be to the passengers' disadvantage at times.
On one flight returning to London I was first diverted to Hamburg. That seems a ludicrous diversion. I am not saying that in such a case automatic landing would have got me down in London but it might have done so and saved me a great deal of inconvenience and extra travelling time. The statement in a report of this kind that blind landing facilities in the United Kingdom are lagging behind, presumably because of lack of development, is something which should be mentioned in a debate of this kind. I am sure my right hon. Friend is aware of it, and I hope that he will do his best to improve it. I feel that I can give a general welcome to this Bill because it is sensibly laid out; it is making adequate provision against the background of a pledge given by the then Minister of Aviation; and we ought to have no trouble at all in passing this Measure this afternoon.

6.0 p.m.

Mr. Tim Fortescue: I am glad to follow the hon. Member

for Bristol, North-East (Mr. Dobson), with many of whose ideas on aviation I always find myself in agreement. On one or two small points that he has made I should like slightly to disagree, and I am sure he will understand that there is no personal element in that disagreement. He rather chided B.E.A. for daring to criticise the Government in its annual report. This is a fashion which has been set by the chairmen of all the nationalised industries, with Lord Robens in the lead. The Governor of the Bank of England and heads of every national industry make a practice of criticising the Government, and I do not see why B.E.A. should be held to be an exception to this apparently universal rule.
The second point with which I would slightly disagree is the question of air navigation charges being increased at municipal airports. I should declare an interest since they are being increased at Liverpool Airport, which happens to be in my constituency. The complaint of municipal operators is that although charges at their airports are being increased by 50 per cent.—a remarkable increase in the light of the prices and incomes policy and the other restrictions on our economy—charges at Heathrow are not being increased on the ground that it pays its way; but charges at other British Airport Authority airports are not not being increased either. This is the burden of the complaint of municipal operators, and, as my hon. Friend the Member for Woking (Mr. Onslow) has said, it is to be hoped that we shall in due course have a chance to put the arguments against these increases to the House when a Prayer to annul the Order is moved.
We are debating the future financing of an airline of which the whole House and the whole country is very proud, an airline which advertises itself as No. 1 in Europe, and which in the minds of most citizens of this country certainly is regarded as No. 1 in Europe. As several hon. Members have said, that is no reason at all why we should not criticise it and look at what is wrong with it, because there is something wrong with every human institution. I hope that nothing I may say will be construed as meaning that I am not very proud of being a part owner of British European Airways. The Chairman of B.E.A. in a statement at


the end of last year, just after the sad demise of British Eagle, a statement which was given wide publicity, said:
How I wish we could, as a nation, stop arguing private versus public ownership, because one can only promote the one by denigrating the other. Could not we call a halt to all this and accept, for better for worse, that this nation has a mixed economy and will always have one?
I am sure that in the Middle Ages the bold, had baron in his castle looking out over his domain at the peasants working in the fields said something like that, asking, "Could we not call a halt to any attempt to change the present situation? We have always had a mixed economy and we always shall have". I am sure that the aristocrats in France just before the Revolution looking at their serfs toiling in the field must have said, "Thank goodness we have a mixed economy and shall always have one".
Sir Anthony Milward—to whom I pay tribute—showed in his statement a lack of imagination in chiding the independent sector of the airline business for saying that perhaps there ought to be a change in the balance between the public and the private sectors. He is the "haves". They are the "have nots". He has all the schedule routes, and they have hardly any. It is all very well when one is sitting on a bag of gold from which someone wants to take just one or two pieces to say, "We have a mixed economy. This is the way we do things. We have always done this and always will". For airlines the schedule services are the key to prosperity. Without scheduled services it is very difficult to make an airline pay. Historically, scheduled services in Europe and the United Kingdom have been reserved for B.E.A., though one or two have escaped the net. British Eagle managed to devise a few which B.E.A. did not want, and it was ingenious in doing so. But no independent airline can possibly become prosperous unless it has some of the scheduled services which at the moment are reserved to the nationalised Corporations, which the independent airlines get only as crumbs from the rich man's table. The prize example is British United Airways. When B.O.A.C. said it did not want to run the scheduled South America services any more because it could not make them pay, British United picked up that very substantial crumb—

the only time there has been one. Within one year it had made a profit on those services, and yet B.O.A.C. wanted a subsidy of £1¼ million to continue to run them for a year. This is direct evidence of the ability of independent airlines to work on a financial and economic basis if they can have scheduled services.
I strongly believe that unless we want to hand a complete monopoly of the air services in this country to B.E.A. some of the scheduled services will have to change hands. This is what the Edwards Report is all about. I can understand the Minister bringing on this debate before the Report is published, because had it been published before this would have been a debate on the Edwards Report, which is not at all the intention of the Government. To my mind that was right because that report will take many days to debate and we have only half a day. Not content with hogging all the scheduled services in Europe and the United Kingdom and objecting always when anybody else applies for one, B.E.A., I understand, is now going to invade the charter section of airline business which until now had been more or less reserved for the independents. This bold, bad baron, not content with sitting in his own castle watching the peasants in the fields, wants to pinch the fields as well. I believe that this enterprise must be looked at very closely. There is a tendency just beginning for blocks of seats in aircraft on scheduled services to be reserved and chartered at cheap rates. This must be looked at. It should be a matter of the closest consideration by the Government because if the Corporation, with Government money behind it, is to be allowed also to invade this sphere, then I see very little future at all for the independent airlines.

Mr. Leslie Spriggs: Is the hon. Gentleman aware that because of the high quality of service which B.E.A. provides to the public, there is a public demand that B.E.A. should enter the charter service?

Mr. Forteseue: The service provided by B.E.A. is like the curate's egg. It is good in parts.
I am a little surprised to find, though this is to a degree because of my own ignorance, that hitherto there has


apparently been only inadequate provision in the legislation covering B.E.A. on the level of Schedule 2 of this Bill, which provides that board members of B.E.A. should not have a conflict of interests when they are appointed to the board. This will become more complicated when the new charter activity of B.E.A. begins. I recommend the Minister to re-examine the interests of the present directors of B.E.A. to make certain that none of them has interests in charter companies or in travel agencies which place a lot of their business with charter companies. I think that this new activity will complicate the position, and the provisions in Schedule 2 have come just in time.
I turn now to the standard of service provided by B.E.A. The Civil Aviation Licensing Act, 1960, passed by the Conservative Government of nine years ago, is entirely out of date, and will, I am sure, be modified as a result of the Edwards Report. Under that Act the Air Transport Licensing Board has to take certain matters into consideration when granting a licence, or considering granting a licence, to an airline. There are many factors which it has to take into account, but I shall refer to the principal ones only.
It has to take into account the competence and fitness of the applicant to operate the service having regard to his experience and financial resources. It has to take into account any unfair advantage over other operators through the conditions of employment of his staff. It has to take into account the need for the proposed service, and the extent of any likely duplication or diversion from other licensed services, and so on. Nowhere in that Act is it said that the board in considering granting a licence has to take into account the interests of the passenger. He is not mentioned anywhere. By law the airline does not have to look after the passenger. The applicant for a licence is given a licence whether he is willing to look after the passenger or not. Nor are the interests of the British aviation industry one of the criteria which the board must take into account.
The chief safeguard for standards of service to be maintained in any undertaking is the competition of similar undertakings. This is the one matter which

keeps people on their toes—that if an operator does not have proper standards of service his competitors will take his business. This is why people provide a good service, and this is proved in the case of B.E.A.
I do not know how many hon. Members have flown by B.E.A. from Frankfurt to Berlin. The competition there is very hot indeed. The route into Berlin is flown by several airlines, and they are all very good. B.E.A. did not have jet planes, and it found that it was losing business. As soon as it put the BAC 1–11 500 on the route, its business picked up. These airlines watch one another like hawks. The standard of service on that route is magnificent, and I pay the highest possible tribute to it. I am sure that anyone would be proud to fly B.E.A. over that route.
In this country, however, where B.E.A. has only the minimum of competition, can anybody in this House say that when he flies by B.E.A. on a domestic route, or when he uses one of B.E.A.'s subsidiaries on a domestic route, he is proud of the service that he gets and satisfied that the service could not possibly be improved? I fly a lot in this country, and I am constantly ashamed of the service that I get.
The route between London and Liverpool, which I fly frequently, used to be operated by both British Eagle, of blessed memory, and Cambrian Airways, which is now a subsidiary of B.E.A. When they were both flying that route, the service was very good. British Eagle is not there any more, and this route is now flown by Cambrian Airways alone. There is now a new pattern of behaviour. One goes to the airport, and just before the aeroplane is due to leave the passengers are herded into a bus. The bus has only a few seats, and one has to stand for 15 or 20 minutes waiting for the bus to move off to the aeroplane.
I have complained long and bitterly about this. The reason given for the hold-up is that after the ordinary passengers have got into the bus the airline staff begin to check in people who are there on the off-chance that they will get a ride—what are called stand-by passengers who pay a reduced fare.
That is one way of doing things, but it is not a very good way. When there


was competition between British Eagle and Cambrian Airways it never happened. Passengers were not kept waiting 20 minutes in a bus before boarding the plane because both airlines knew that if one of them did that, on the next occasion the passengers would use the other airline. Standards of service can be kept up only if there is proper competition, and it is essential for the standards of B.E.A. services to be stimulated constantly by competition wherever this is possible.
We have heard about the new aeroplanes which B.E.A. is to get, and good luck to them. We have heard the hope expressed that B.E.A. will be able to buy the new BAC 3–11. We shall look forward with great interest to hearing from the Minister of Technology eventually whether development backing will be given to that aircraft. I hope that it will be. I have every reason to believe that B.E.A will be delighted to have it.
But we have to look one generation of aircraft beyond that. We have to look to the end of the 'seventies and the beginning of the 'eighties. By then the new concept in civil aviation of vertical take-off and landing or short take-off and landing aircraft will be with us and will be a commercial proposition. We have heard that by 1973 the Americans will have in service a 40-seater helicopter which will carry passengers over a range of 500 to 600 miles at a cost of 2½d. per route mile, which compares with anything flying now.
Trains do the journey from London to Liverpool, station to station, in two and a half hours. Trains will be improved, and we shall get to the era of super-trains running on different kinds of track, and perhaps even running on the hovercraft principle. When that happens, the journey time between London and Liverpool by train will be reduced, and unless within the next ten years there are air services from city centre to city centre our airlines will lose all their traffic to the trains.
The opportunity for providing such services will become available because, by the march of events the dock areas in our great cities will become smaller. With the container revolution in shipping, fewer docks will be needed. Ships will turn round more quickly, and these huge areas

of docks in the middle of London, Liverpool, Manchester and Southampton—to name but a few—will no longer be required. The dock areas in our great cities will be ideal sites for vertical take-off and landing planes, which will be able to convey passengers very quickly from point to point, though, of course, no faster in the air than—if as fast as—is the case now.
In the intervening stage between now and then, what better could B.E.A. do than turn its attention to the two short take-off and landing aircraft now in operation all over the world? They are both British made; we can be very proud of the Islander and the Skyvan. These are two most excellent small aeroplanes holding their own in markets everywhere, and yet no one in this country, except in the very north of Scotland, is even considering them.
B.E.A. has an helicopter service from Penzance to the Scilly Isles. It is the only scheduled helicopter service in this country. It is operated with American helicopters. Is this not an ideal opportunity to replace those American helicopters with the Islander or the Skyvan, both of which can land on and take off from the Scilly Isles with full loads, to prepare the way for the time which must come in the near future when this type of aircraft is operating on trunk routes in this country?
I wish the Bill well and hope that it has a speedy passage through Committee, where, I assure the Government of my support for its general principle.

6.20 p.m.

Mr. John Rankin: I listened to the hon. Member for Liverpool, Garston (Mr. Fortescue) with great interest. I agreed with a great deal of what he said. I welcome B.E.A.'s intention to take part in holiday traffic because it will ensure higher standards of treatment and safety for passengers than are provided by many other operators catering for this type of traffic. It is a lucrative and expanding traffic. The hon. Gentleman said that civilian passengers should travel in the best conditions. I agree. I apply the same dictum to holiday traffic. There has been a tendency to pack people into aircraft which have been out of use for long periods and to take them to the Continent as quickly as


possible. I have heard it said—I have not proof of this, but it comes from good sources—that sometimes their return is not assured.
I disagree with the hon. Gentleman about the service provided by B.E.A. on the ordinary passenger routes. I have been travelling on these routes since the days of the D.H. Rapide. Therefore, I can compare the time when we did not even have a glass of water to ease our trepidation, if we were nervous, with the facilities of comfort and speed provided by the Trident. I can compare the 54 minutes of sleek comfort which one enjoys while the Trident covers the distance between London and Glasgow, and vice versa, with the 2½ hours which one used to spend on the journey.

Mr. Fortescue: I have no criticism to make of the safety and efficiency of the aeroplanes and their crews once they are in the air. Those are first-class. It is the cavalier way in which passengers are treated on the ground at both ends of the journey which worries me and which is not nearly as good as the treatment which one receives between Frankfurt and Berlin where the competition is much more acute.

Mr. Rankin: It puzzles the hon. Gentleman, but it mystifies me. The bus has disappeared at London Airport. I am lucky perhaps because I cannot recall when I last saw a bus. The pier now is fully used. Therefore, there is no crowding of passengers into buses. We are like people going to work in the morning. We leave at 9 o'clock and return at 4 o'clock. There is no rush, and a seat is waiting for us. The hon. Gentleman must admit that tremendous progress has been made not only in the development of the aircraft and its safety but in the way in which passengers are dealt with at our large terminals.
I completely agree with what the hon. Gentleman said on the second matter to which he referred. In Britain we are at the beginning of another revolution. Profound changes are taking place under our noses. The hon. Gentleman referred to the speed at which trains now operate between London and Manchester, Newcastle and even Glasgow. With the advent of a different type of rail, the speed of those trains will be doubled. When that happens,

the short-haul aircraft in the United Kingdom will begin to see the end of its days. Surface transport will take over again, and the aircraft will have to seek its fortune outside these shores.
Another development is the jumbo jet. The crowd of 100 people which used to get off the Vanguard will rise to 250 or 280 when the jumbo jet lands. There will be an entirely different approach to the phenomenon of air travel. People will visit places on holiday which they do not even visualise now. Instead of Europe, holiday makers will be going to East Africa and the nearer parts of Asia.
We are waiting not for Lefty, but for Edwards. Whenever we debate aviation in the House, we are waiting for somebody's report. What will happen when we have the Edwards Report? We shall debate it for a day when about a quarter of the Members who wish to speak will not be able to do so. The Edwards Report will follow the path of other reports, back to the Library, and we shall carry on. This time, we shall not be able to do so because development, invention and expansion will drive us forward. In this short debate we seek to prepare ourselves for the age which lies almost at our feet.
Lured on by the hon. Gentleman, I have said many things that I did not mean to say and that were not initially in my mind. I am now wondering how to work in the speech which I have prepared. I believe in Government intervention. I like to think that the Government are always prepared to intervene in this industry, because in my experience Government intervention has always been good for the industry. I hope that the Government will continue their activity in the industry and that there will be a Government-patronised operating unit such as B.E.A. always functioning.
I was glad to hear the Minister pay tribute to the B.A.C. 311. I hope that was an indication of the direction in which Government thoughts are turning and that the 311 will be the Government's choice for the jumbo jet age.
What appeals to me about the organisaton of B.E.A. is that it has established excellent labour relations at all levels. This has been one of the great factors in B.E.A.'s success.
Knowing that there is another debate awaiting and that others wish to speak in this debate, I must leave the matter at this point. I congratulate my hon. Friend the Minister of State on the way in which he presented his Bill.

6.35 p.m.

Mr. Peter Blaker: I agree with the hon. Member for Glasgow, Govan (Mr. Rankin) that B.E.A. services are better than they used to be, but I doubt whether that quite answers the point which was made by my hon. Friend the Member for Liverpool, Garston (Mr. Fortescue). I should like to have a word with the hon. Gentleman privately about how he gets this V.I.P. treatment at Heathrow, because his experience does not accord with mine. I can only think that the explanation must be that the hon. Gentleman is going through the V.I.P. channel.
I was glad that my hon. Friend the Member for Woking (Mr. Onslow) raised the question of B.E.A.'s plans to go into the hotel business. This is an important subject and a new tendency on the part of B.E.A. We know that it has plans to go into the hotel business in a big way, because Sir Anthony Milward published in The Times on 21st January a piece headed
Why B.E.A. needs a hotel stake.
This interesting article makes it clear that B.E.A.'s plans to go into hotels are ambitious. Moreover, it has an interest in the proposal to build a 1,000-bedroom hotel at Victoria Station.
I do not claim that such a venture would be beyond its powers under the statutes. I simply question whether it is necessary or desirable for B.E.A. to go into the hotel-building business. If private enterprise is capable of doing the job without any disadvantages to B.E.A. in its primary rôle of running airlines, that would be a better way of doing it.
In the article in The Times Sir Anthony said:
A full and comprehensive overall travel service means, inter alia, seeing that passengers are provided with suitable accommodation at destination points, and this in turn can mean booking, buying or building hotel rooms as the case may be … we would prefer to leave the running of hotels to hoteliers and their development to entrepreneurs, but we cannot afford to sit and wait and risk letting down our future passengers.

Sir Anthony refered also to the impending introduction of jumbo jets and, finally, to the great need, which he believed was not being met adequately, to provide modern, inexpensive hotel rooms.
I want to explore why, to use Sir Anthony's words, the booking or buying of hotel rooms is not adequate and why it is necessary for B.E.A. to go into the business of building hotels. Have the airlines been seeking to persuade private hoteliers to build the hotel rooms which they believe to be necessary and which they do not think are being constructed? Have they explored the opportunities of encouraging private enterprise to do the job, as Sir Anthony himself says he would prefer to happen?
My information, such as it is, suggests that they have not explored this possibility. I am told that no British hotel concern was approached about the 1,000-bedroom project at Victoria. I believe that at one time it was intended that Intercontinental Hotels of America should be associated with the development and that not only was no effort made to persuade British companies to go into the enterprise but that they were not even given an opportunity to come into the scheme, and that, indeed, one British hotel company received a brush-off when it approached the airlines.
The article appears to assume that hoteliers are not aware of the impending arrival of the jumbo jet. Of course they are. It is very much in their minds. The Minister of State and I have had exchanges upstairs in Committee repeatedly in the last few weeks about hotel construction, and we are pleased that it is going ahead fast. There is a tremendous spate of building of new hotels, induced largely by the Government's new scheme for grants and the fact that it will expire before long. People are building hotels while the scheme is available.
I wonder whether Sir Anthony is right in thinking that this job is not already being done by private enterprise or that if he chivvied private enterprise and tried to persuade the very efficient British hotel companies to do the job they would not be prepared to do it.
Hon. Members opposite may ask—I am sure the hon. Member for Glasgow, Govan would—why should not B.E.A.


do the job of building hotels? The hon. Gentleman might point out that other airlines do it. They do; but that does not show that it is necessary or desirable for B.E.A. to do it or that these other airlines were right about their own interests. At any rate, it does not show that a wholly nationalised airline should be doing it.
If the interesting suggestion floated by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) reflected the actual situation, if we had a national airline which had a substantial percentage of private equity capital, my anxiety about its intention to go into the hotel business would be very much reduced, but when we have a totally nationalised airline we should look at its intention to go into hotel business with a sceptical eye.
This is, first, because the financing of these new hotel developments is going to be a burden on public funds. We all know the difficulty of raising public funds for capital purposes which Governments can experience. The second reason is that I believe that there is likely to be involved an element of subsidy in the construction of hotels by the nationalisd airlines. On 3rd April, 1968, my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) asked the then Minister of Transport
if she will give a general direction to the British Railways Board that no railway land should be disposed of, whether to a private firm or a nationalised industry, at less than the full market value."—[OFFICIAL REPORT, 3rd April, 1968; Vol. 762, c. 101.]
This is relevant to the enormous and important scheme at Victoria Station. He received from the Joint Parliamentary Secretary the flat answer, "No". That cannot encourage those of us who are worried about the possibility that land might be provided by British Railways to the nationalised airlines at subsidised prices.
My hon. Friend returned to the charge by asking the Minister of State, Board of Trade last July to ensure that, in so far as hotels to be built by nationalised airlines were built on land at present owned by the railways authorities, no special financial arrangements would be made. The Minister of State said that he would take note of that point. This

is surely a suitable opportunity, since he has been able to reflect on the question, to say something further in order to allay our anxieties.
I have been talking of the possibility of a subsidy for the construction of hotels but there is also the question of a possible subsidy for running them. In his article, Sir Anthony Milward said:
Political circles sometimes get excited about the known ambitions of B.E.A. and B.O.A.C. to participate more and more in hotel ownership.
I think that "ambitions" was perhaps a curious word to use when he had just disclaimed the desire to go into the hotel ownership business at all. He went on:
In particular it is suggested that it is unfair to private enterprise for nationalised coporations to use public money as capital for projects competitive with the private sector. This is a narrow view which completely ignores the obvious benefits …
to the economy of developing hotels. He added:
… all our hotels have got to pay.
He regarded that point as disposing of the argument that there might be a subsidy in the running of the hotels.
I hope the Minister of State may devote some time to the question of subsidies for the running of hotels. It is obviously true, as Sir Anthony says, that we need new hotel building, but why do we have to put public money into building or running them?

Mr. Spriggs: The hon. Gentleman is asking why the Government should put money into the public sector of the hotel business, but he does not oppose the Government subsidising the private sector of the hotel industry. Would it not be fair to accept the principle of a little competition here and give a little to the public sector as well as to the private?

Mr. Blaker: Perhaps it would be unwise for me to go far along the path the hon. Member for St. Helens (Mr. Spriggs) has opened up. Perhaps I can send him some of the speeches I have made in Committee upstairs on this point. In relation to subsidies for the private hotel sector, the short answer is that I should like to see the private sector treated on a par with other industries. It is certainly not being treated so at the moment. It is being heavily discriminated against.
I do not see how the public will be able to know whether there is a subsidy for hotels opened by B.E.A. Would it even be possible for this House to know whether a subsidy is paid to B.E.A. for hotels, whether for construction or running costs? Perhaps the Minister of State will tell us how this House, which has the job of looking after public expenditure, will know whether there is a subsidy. Even if there is no subsidy in a direct sense towards the running costs, it is surely impossible to believe that there will be equality of competition.
In the past, speaking of B.O.A.C., the Minister of State has said that the fact that it is expected to make a return of 12½ per cent. on net assets is a guarantee against unfair competition. Perhaps the words "unfair competition" are rather emotive, so let us say, "equality of competition." When talking about B.E.A., it is not a question of 12½ per cent. on net assets. The Government White Paper of 1967 put the figure at 6 per cent., and the Minister of State said today, as I understood him, that the target which would be set in the period 1968–69 to 1971–72 would be 8 per cent. before charging interest.
How could a hotel company in the private sector be satisfied to show a return of 8 per cent.—even assuming that B.E.A. achieved its target, for it is now reaching only 5 per cent? A private hotel pays interest on borrowed money of probably 9 per cent., together with Corporation Tax of 45 per cent., it has to pay dividends, and has to have some cover for its dividends in order to plough back money for future development. To the extent that B.E.A. is taking part in hotel development, the inevitable result is likely to be that its hotels will be able to charge lower tariffs, or that it will be able to develop hotels which a commercial concern could not afford to touch.
There is a further point. The rate of return which B.E.A. is expected to make—6 per cent. if we are talking about 1967 and 8 per cent. if we are talking about the objective which the Minister has just explained—is presumably a suitable return for aviation, which is the primary objective of B.E.A., but is it necessarily a suitable return for a hotel enterprise? I do not think it is. The figures for hotels would, logically, be different from aviation figures. So, even

without taking into account that nationalised corporations have a bottomless purse, without taking into account that they have favourable arrangements for raising money and that there is no risk, for example, of their being subject to take-over bids, it is difficult to see how competition can be on an equal basis.
On the assumption that my remarks may not persuade the Minister to give a directive to B.E.A. not to go into the hotel business, the possibility of which I must face, what will be the policy of B.E.A. in the running of the hotels in which it has an interest? Will it ensure, so far as it has the power to do so, that any consortium in which it joins for the purposes of hotel construction will offer the British hoteliers a fair opportunity to compete for the running of the hotel? Notoriously, this did not happen with the projected hotel at Victoria. British hoteliers are very worried about this. I understand that it is proposed to form a consortium of several European airlines, and it is fair that British hoteliers should ask that an equal opportunity on a fair basis should be accorded to them to participate in the running of hotels in this country in which British airlines have an interest.

6.53 p.m.

Mr. Russell Johnston: Inevitably, at this stage of a debate on a Bill which is largely non-controversial, most of the basic points have been covered. I seek not to reiterate those points but briefly to record from this bench our support and welcome for the Bill. I welcome particularly Clause 2, which provides for public dividend capital. My hon. Friend the Member for Orpington (Mr. Lubbock) argued for this as far back as November, 1962.
Equally, the House accepts that it is to the benefit of the British aviation industry and of B.E.A. that we should be able to use the Trident. The first Tridents have been very successful, and there is every indication that the third will be an outstanding aircraft.
The hon. Member for Woking (Mr. Onslow), in his wide-ranging remarks at the beginning of the debate, asked one or two questions about the Highlands and Islands services, to which I will briefly refer. We are awaiting the Edwards Report and, in consequence, it is perhaps unfair to tax the Minister


about any of these matters, since he will inevitably say, in the equally unfair fashion of Ministers, that he is unable to say anything until he is in a position publicly to comment on the report, which doubtless he has already seen and examined.
I know that acute concern is caused by those sections of the B.E.A. network which run at a loss, and the situation on the Highlands and Islands sector is fairly critical. Last year the annual report of B.E.A. showed the loss in that sector to be £374,000. Leaving out of account any argument as to how exactly accurate this figure may be, the B.E.A. representative, Mr. Herring, was quite specific about it. At paragraph 197 on page 29 of the Minutes of Evidence given before the Select Committee on Nationalised Industries. Mr. Herring said:
We have accepted a figure—it has never been defined, but it is in the order of £300,000 a year—as a loss which we can contain very largely from profits elsewhere, but we certainly could not exceed it.
If B.E.A. is reaching the position of being involved in a loss which it accepts as something which it cannot contain, we must ask how that loss will be paid for?
I do not know whether the Minister will be able to comment on whether the principle which the Government have accepted in the Transport Act, 1968, for the railway system is a general principle which they are likely to apply to the airway network. I should not have thought there was a basic difference between the two services.
I have not had the glorious experiences of the hon. Member for Glasgow, Govan (Mr. Rankin) of being whisked straight into aircraft, but I fly by B.E.A. probably more regularly than any other hon. Member to and from North Scotland. I make the journey very week, and sometimes two or three times a week, and I find that the overall standard of service and punctuality is extremely good. The people who complain most about B.E.A. are the sporadic users of the service which hit a bad time. They complain bitterly that they could not get on to the aircraft or that they were buffeted by the cross-winds at Turnhouse. This is hardly the responsibility of B.E.A., but may to some extent be the responsibility of the Minister. As one who uses the service regularly, I

appreciate the standard which is maintained by B.E.A., and I hope that the Bill will contribute to that standard being maintained in future.

6.58 p.m.

Mr. Stanley R. McMaster: I shall not detain the House for long as the hour is late and there is other business to be done tonight. I shall briefly refer to some matters to which I feel the Minister should pay particular attention. Like the hon. Member for Inverness (Mr. Russell Johnston), I, too, travel regularly by B.E.A., not between London and Scotland but to and from Northern Ireland. Generally speaking, I agree that the servise is of a high standard, though it must be said that one can experience difficulty on occasion.
Only a week or two ago I booked a ticket by telephone. I was told that I should check in an hour before take-off, which seems a little excessive when one considers that the flight to Belfast takes only an hour. However, perhaps it turned out to be right, because I was a little delayed by traffic on the way to the airport. When I arrived, there was a short queue at the desk, but eventually I was able to check in. Due to delays in dealing with passengers who had arrived earlier, when finally I got my ticket I was left with barely 20 minutes in which to check in my luggage, and I found that my seat had been sold. The result was that I had to get another flight, though the notice on my ticket said that it was possible to check in up to 20 minutes before take-off. To round off the story, when I arrived at Belfast I found that my luggage had been lost. I must have got out of bed on the wrong side that morning. I drew the facts to the attention of B.E.A., and I received an apology. It may be that there is a little substance in the comments of hon. Members who have criticised the service.
One or two shortcomings might be considered. First, there is the requirement to check in one hour before take-off. Then there is the fact that one finds only two clerks issuing tickets for the whole of B.E.A.'s domestic services. There are the same number in Belfast, which is a very much smaller airport. That does not appear to be paying proper consideration to the needs of passengers. One of B.E.A.'s aims is to provide a


fast city-centre to city-centre service. It is hardly consonant with that to have to check in the same time before takeoff that it takes to fly the 200 or 300 miles to a destination in Scotland or Northern Ireland.
My hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) made the point that B.E.A. must keep up and improve its services. It might even be possible for it to introduce flights such as those between New York and Washington, where one can check straight on to a plane and thereby save half an hour. To persons like the hon. Member for Inverness and myself, travelling every week in both directions, half an hour saved on a flight represents a considerable amount of time.
B.E.A. should remember that on many routes in the United Kingdom it has a virtual monopoly position. As a result of the activities of the Air Transport Licensing Board, very few licences have been given to its competitors. Being in a monopoly position, B.E.A. should take great care of its passengers. It has a special duty. It is not as though it is being pressed by competitors, and, therefore, it should take special care to see that complaints about lost luggage and discourtesy at airports do not arise. Some years ago British Eagle was given a licence to operate flights to Belfast, and British United Airways has now taken it over, but in both cases the licence was granted for only one or two frequencies a day. None the less, a viable service is provided, and it is noticeably better than that provided by B.E.A.
B.E.A. and our whole airline policy would be improved if we allowed more competition on routes within the United Kingdom. Against that, it has been said many times that B.E.A. is in a special position in that a lot of public money is invested in the air corporations. Licences are hotly contested by the State corporations, and it is said that providing them to competitors would only reduce the profitability of B.E.A. and damage the taxpayers' position. However, I think that that begs the question, because it assumes that the same number of passengers will fly in any event.
Where there is competition one normally finds improved standards and more advertising, both of which result in increased

traffic. In turn, increased traffic tends to reduce fares and provide more efficient services, and still more traffic is stimulated, As a result, a better market is created for British aircraft, and that assists in the design and production of new aircraft.
A more liberal policy is required if air traffic is to be stimulated and if we are to improve the services rendered to the community. Those, after all, are the ultimate aims of this Bill, and Government policy, at the same time, should be to benefit our aircraft industry.
My hon. Friend the Member for Liverpool, Garston spoke about vertical and short take-off aircraft. I am not so convinced as he is that it is possible for a vertical take-off aircraft to land in the centres of large cities. An aircraft of the size necessary to provide an economic service must carry at least 50 or 60 passengers, and it would require an enormous thrust to take off vertically. In addition, even though a considerable height can be attained with a vertical take-off before transferring to forward flight, the amount of noise created in lifting such an aircraft off the ground would be considerable, and it would require a greater area than is to be found in the docks, as my hon. Friend suggests.
I was pleased to hear my hon. Friend mention the Short Skyvan, which is produced in my constituency, as one aircraft in which B.E.A. might take an interest. In that connection, the question raised by my hon. Friend the Member for Woking (Mr. Onslow) about the competition for a new airbus is one to which the Government should pay very special attention.
It may be that there is a place for both the A300B and BAC311, but I am apprehensive that the Government's indecision about which of these aircraft to support is in danger of making us fall between two stools. Recently, the French and German Governments indicated that they are prepared to go ahead with the A300B, even if the British Government do not support it. That involves Hawker Siddeley withdrawing from the project. Hawker Siddeley has provided a great deal of capital for the development of the aircraft. It will be a tragedy for the British aircraft industry if we lose not only the participation, the employment and the development and design work


which this will provide, but also the benefit of that part of the design already contributed by Hawker Siddeley, which has done a great deal of work on the wings and the engine pods of the aircraft.
There is also a danger that if Britain pulls out of the European airbus project we shall lose the engine contract. As long as we were one of the partners it was likely that the Rolls-Royce engine, the RB211, which has already been provided for the Lockheed airbus in America, would be installed in the A300B. But it has been suggested—I believe with some justification—that if Britain pulls out, the French and the Germans, with perhaps Italy also participating, will go on and use the American Pratt and Whitney engine, the competitor of the Rolls-Royce engine. These are important considerations. If France and Germany go ahead, the question remains whether B.A.C. can produce the B.A.C. 311 and whether there is a slot for both aircraft. The A300B would have a sure market in France, Germany, and perhaps Italy, which would leave too small a market for the BAC Three-Eleven. I feel that the Government must come to an early decision on this vital question affecting the future of our aircraft manufacturing industry.

7.12 p.m.

Mr. William Rodgers: rose—

Mr. Speaker: Order. The Minister of State needs the leave of the House if he wishes to speak again.

Mr. Rodgers: I ask the leave of the House to reply.
We have had a useful and fairly wide-ranging debate. I am glad that it has remained on the business and affairs of B.E.A. and has not spread into the whole area which will no doubt be covered when we have the Edwards Report. A number of points have been raised about the need for more competition—for example, about the rôle of B.E.A. in the inclusive tour market. Those are matters which we shall have to discuss at that time.
In preparing for this debate I thought that at this stage I might have to assume a defensive role. I am delighted to find that this is not the case. In particular, I am pleased at the tributes which have been paid to Sir Anthony Milward and

to all those who work for B.E.A. Although we may from time to time find some criticism of B.E.A., it is in fact a first-class air line, highly competitive and successful in many ways. No doubt its services can be improved. I share the view of the hon. Member for Belfast, East (Mr. McMaster) that where an air line has a monopoly it has a special obligation to try to maintain standards upon which competition might otherwise have an effect. By and large, I think that B.E.A. has been treated fairly and sympathetically this afternoon, and I am delighted that there is a general feeling that the provision in the Bill is right, given all the circumstances.
The hon. Member for Woking (Mr. Onslow) was helpful in saying that some of the matters which he raised would have to be pursued in Committee. That is the appropriate time to deal with points of detail.
Navigation charges have been raised by the hon. Member for Liverpool, Garston (Mr. Fortescue) and others. As there is a Prayer on this matter, that will be the appropriate time to go into greater detail.
The new forms of aviation—VTOL and STOL—are likely, over a period, to make a real contribution. At the moment, as the hon. Member for Belfast, East has said, VTOL aircraft are exceedingly noisy and this problem will have to be overcome.
It may be of interest to the hon. Gentleman to know that I flew in a Skyvan before it received a certificate of air worthiness. Ever since I have thought it a good plane which deserves to sell well.
I have taken note of what was said by my hon. Friend the Member for Bristol, North-East (Mr. Dobson) about blind and automatic landing. I entirely agree that we must ensure that the lead which Britain has given at her airports in this respect is maintained.
My hon. Friend the Member for Poplar (Mr. Mikardo) gave us a typically well-informed and thoughtful speech which was concerned, in a sense, with the philosophy of the policy upon which the Bill is based. I share his view, and the view of the Select Committee, that it is desirable, in the case of B.E.A. and other airlines, to isolate as far as possible the element of subsidy, to deal with it in a clean and straightforward way


without any blurring, and then allow the industry to carry on with its business in a proper commercial fashion. Anything else is likely to lead to inefficiency and to weaken morale.
I think that my hon. Friend will agree that the real point is the fair price. Our discussions with B.E.A. concerned the fair price; in other words, the compensation to be paid to B.E.A. because it was not allowed to buy the aircraft of its choice? At that point many questions come into the equation.
We considered various ways in which the Government's pledge could be honoured. Amongst others, we considered the courses favoured by the Select Committee on Nationalised Industries. Though it is not possible to quantify what the consequence will be of B.E.A. buying this aircraft at the end of the day we felt this was a fair and effective method. We hope that the delay, and the fact that the aircraft does not have the exact capacity which B.E.A. would like, will not loom large and, therefore, that the out-turn will be better than we now anticipate. However, we cannot be sure.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) raised the question of the extra £12½ million. He said that it was coming at the end of the period in which the aircraft would be introduced. The Trident 3B is a new aircraft which will be coming into service in about two years. It will not be the precise size that B.E.A. wants. It would be wrong to assume that it will immediately have the earning power of the alternative aircraft had B.E.A. been allowed to buy it. These are matters of judgment and calculation.
The hon. Member for Woking said that he would like more about the figures on which these decisions were based. It was a fair request and I shall do my best to meet it within the framework that he suggested of not unfairly impinging on B.E.A.'s commercial confidentiality. Whereas the expenditure of an airline can be fairly easily predicted for a number of years ahead, it is more difficult to forecast revenue. Revenue depends not only on the attractiveness of the equipment, but upon the growth of the gross domestic product, and the extent to which people change their habits and travel more. It depends, as my hon. Friend the Member for Poplar said in discussing the

factors which should be taken into account, on the fare structure—and that is not necessarily within our control. Many factors come into this difficult equation. The matter was looked at very carefully a year ago, and a best judgment was then formed. It would take a brave man to say that the out-turn will be precisely the same as we anticipated then or precisely the same as we might anticipate now.
The hon. Member for Cirencester and Tewkesbury also entered into a very interesting discussion, with which I have a large measure of sympathy, on the crucial question of the relationship of publicly-owned airlines to the manufacturing industries. It is a very complex problem upon which I find it difficult to be dogmatic. One's first instinct is to say that an airline which is expected to operate commercially should be free to buy the aircraft that it wants. But apart from the balance of payments considerations, which can be exaggerated, there is the whole question of the British aircraft industry and whether a British airline should be so free, irrespective of the consequences to British manufactures. We then get on to the further stage and ask, should not the industry seek to build aircraft for which there will be a world market? But here, in a highly competitive field, they are naturally looking round for the airlines which are most likely to provide them with business.
In future, there should be a continuing dialogue, so far as there has not been one in the past, between the airlines and the industry and there should not be too rigid a position in which the airlines say what they want and the manufacturers provide the planes which, in their own judgment, will not pay their way by sales in the world. There are many sophisticated elements in this problem, so I will do no more for the moment than note what the hon. Member says and agree that this should be taken into account in future.
The hon. Member for Garston and the hon. Member for Inverness (Mr. Russell Johnston) mentioned the Highlands and Islands services, as also did my hon. Friend the Member for Poplar when referring to the general problem of subsidy. I agree that the present position is somewhat anomalous, in that B.E.A. has accepted the considerable responsibility of carrying a deficit on its


Highlands and Islands operations. As the years go by, the view may be taken either by the House or by the Government that this is a service which should be isolated and dealt with, as my hon. Friend suggested, in the way which we have adopted for the railways. However, for the present, B.E.A. takes the view that this is an obligation which is proper for it to undertake and which has desirable implications for the rest of its network.
I should issue a cautionary word here, if we are looking to the future. We should assume, because of the nature of airline operations, that there will be some routes which turn out to be uneconomic but which an airline, whether nationalisec or independent, believes that it should try to operate. Certainly, in the United States, apart from the routes which are subsidised by the C.A.B., most of the airlines say that, for purposes of their own, they accept an obligation to fly on uneconomic routes. The House would be wise to await the Edwards Committee's Report before deciding what the future structure should be, both in terms of the serving of uneconomic routes for social or economic purposes and, for that reason, where the Highlands and Islands fit in.
The hon. Member for Blackpool, South (Mr. Blaker) raised a number of questions about competition in the hotel business. If we consider that the nationalised industries are here to stay, we must be sure not to place them in an unreasonable position by denying them a right to diversify into fields closely related to their other activities. There is a reasonable requirement to ensure that competition is fair. But it would be defeating the purposes of allowing them to operate commercially if they were told that they could not, for example, enter the hotel market.
We have to be consulted about any major investment in hotels, and the criteria we would apply is the present one of at least an 8 per cent. d.c.f. return. We have control of major capital expenditure, so at the end of the day it would be for Parliament to discuss and to decide whether the scale of investment in hotels by B.E.A. was right.
It is misleading to talk of B.E.A. as an owner of hotels. Its investment in hotels in the whole of Europe over the next five years is estimated at about £3 million.

The intention is that most of the capital will be provided from other, mostly private, sources. Private interests will have an adequate opportunity to participate.
On the hotel at Victoria, I note what the hon. Gentleman said, as I am sure B.E.A. will, but firm proposals have not yet been made and we shall have an obligation to consider them when they are made.

Mr. Ridley: I am sure that the hon. Gentleman will agree that there should be absolutely separate and properly presented accounts of such business. He would undertake that B.E.A. or any other nationalised industry which carries on an ancillary activity of this sort will publish completely independent accounts of it, would he not?

Mr. Rodgers: I would certainly assume that B.E.A. would not conceal the outcome of its investment. As has been said, B.E.A. accounts are very detailed and helpful. I wish that all airlines, public and private, were prepared to set so much information on record. As a general principle, that is the direction in which we should increasingly move. So there are proper safeguards for fair competition for B.E.A.'s investment.
The hon. Member for Garston spoke feelingly about the rôle of public airlines in a mixed economy. He was a little unfair to Sir Anthony Mil-ward, who was simply pleading for recognition of the fact that what we want is the growth of British civil aviation and that whether it is in the public or the private sector should not cloud the desire for growth.
It is true that some snide remarks have been made from time to time—although I am glad to say not today—about B.E.A., yet it provides a substantial service. Certainly I have come across no criticisms of the private sector from the nationalised corporations. In the long run, I do not know where the line will be drawn. This is essentially something upon which the Edwards Committee will report, the Government will decide, and the House will debate. In principle, we want to see the growth of civil aviation. I assume that it will be a growth of a mixed sector, but in that mixed sector B.E.A. will have a continuing and very important rôle to play.
I hope that the Bill will receive its Second Reading and will then pass smoothly through Committee to the Statute Book.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — AIR CORPORATIONS [MONEY]

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act of the present Session to make new provision in relation to the finances of the British European Airways Corporation, it is expedient to authorise—

(1) the remission, on such terms as may be provided in that Act, of any obligation of the Corporation to make payments under section 42 of the Finance Act, 1956, section 3 of the Air Corporations Act, 1962 or section 8 of the Air Corporations Act, 1967 in respect of sums advanced under those sections before 1st April, 1968;
(2) the transfer to the Treasury, on such terms as may be so provided, of all rights and liabilities of the Corporation in respect of stock issued before 1st April, 1968 under the Air Corporations Act, 1949 or any enactment repealed by that Act and the treatment of that stock as if it had been created and issued under the National Loans Act, 1968;
(3) the payment out of the National Loans Fund of any sums required by the Treasury for making payments to the Corporation under transitional provisions of the said Act of the present Session relating to the matters mentioned in paragraphs (1) and (2) above;
(4) any increase in the sums payable out of moneys provided by Parliament which is attributable to any provision of the said Act of the present Session for applying section 14 of the Air Corporations Act, 1967 to the Corporation;
(5) the payment into the Consolidated Fund or the National Loans Fund of any sums required to be so paid by virtue of any provision of the said Act of the present Session.—[Mr. William Rodgers.]

Orders of the Day — OVERSEAS RESOURCES DEVELOPMENT BILL

Order for Second Reading read.

7.30 p.m.

The Minister of Overseas Development (Mr. Reg Prentice): I beg to move, That the Bill be read a Second time.
The Bill has two main purposes. The first is to raise the borrowing limits imposed on the Commonwealth Development Corporation by previous legislation—that is, both the overall borrowing limit and the limit of Government borrowing—so that the Corporation can continue to take on new commitments that otherwise would become impossible some time in the early part of next year at its present rate of operation. The second purpose is to remove the existing limitations on countries in which the C.D.C. can operate so that with the consent of the Minister of Overseas Development it can operate in new countries whether they are in the Commonwealth or not.
To put the Bill in the context of the aid programme as a whole, I should make clear that it does not provide any extra resources for development. The money lent by the Government to the C.D.C. within the terms of Clause 1 must, of course, be found within the total sums voted for the aid programme in each year. In 1969–70 we expect to provide £10 million for the C.D.C. out of the total aid programme of £227 million. I point out in passing that the total aid programme is not yet reaching the 1 per cent. target to which we pledged ourselves at New Delhi last year, and neither Britain nor most other aid donors are reaching that target or are likely, on the specific demands yet made, to reach it in the next year or two. This is a subject on which I think none of us feels any complacency. I repeat, as I have said on many occasions, that I do not think that either this country or any other leading Western nation is yet playing its full part in co-operating with developing countries in their struggle to raise the living standards of their people.
Also in passing I take the opportunity to welcome the fact that on today's Order Paper there is a Motion in the name of my right hon. Friend the Leader of the House to establish a Select Committee on these matters. It would not be in


order to pursue that at length, but this is a good development for the Department and for the aid programme, and I extend best wishes to all hon. Members who have agreed to serve on that Select Committee.
The Commonwealth Development Corporation is widely recognised as a very successful and very efficient part of the development effort. This view, which has been expressed many times, was put on record by the Select Committee on Estimates when it reported to the House on 23rd October, 1968. I shall quote from the conclusions of the Committee as printed on page 25 of the report. The Committee quoted the late Sir Andrew Cohen as having given evidence in which he said that the C.D.C. was probably
as efficient a form of aid as exists in this country or anywhere in the world",
a view which I know the World Bank also holds. The Committee said:
This is high praise indeed, but your Committee believe it to be well-founded.
The Committee went on to develop reasons why it thought the C.D.C.'s operations are as successful as they are, and said:
Your Committee are convinced that the expansion of the work of the Commonwealth Development Corporation should be one of the chief priorities of the future aid programme.
I accept that view. I think the C.D.C.'s operations should expand, and certainly it is my intention that they should do so within the limits imposed by the overall aid programme.
In 1967–68 Government advances to the C.D.C. amounted to £9·2 million. In the current year it is aimed that they should be £10 million, and I hope that next year the amount will go up to £11 million. These are modest but worth while increases within a programme which is not expanding overall, and this illustrates the priority that we attach to this work. I am glad also to be able to tell the House that in this financial year we are planning to make some extension of the percentage of the money loaned to the C.D.C. subject to the seven-year waiver of interest. In the financial year which has just finished, 1968–69, this waiver of interest applied to £5 million of the total of £10 million, and in the year 1969–70 it will be £6·5 million of the £10 million.
The Corporation was set up under the Overseas Resources Development Act, 1948. Originally it was the Colonial Development Corporation operating exclusively in the colonies. Later its rôle was enlarged to become the Commonwealth Development Corporation with power to operate in countries that had become independent from 1948 onwards. Its purpose has always been recognised as to assist economic development in the countries in which it operates. It is a corporation which does not have share capital. It depends mainly on loans from the Government, but also to some extent on market borrowing, and it has the duty to pay its way taking one year with another. In other words, it has the task of combining a real understanding of development needs in that it must identify projects of the greatest development value with the need to have a degree of business expertise and organisational efficiency so as not merely to make the best of development potential involved but also to carry out its other duty of balancing its accounts one year with another. I think that all those who have examined its operations over the years will agree that it has succeeded in this important task.
The techniques which the Corporation has used have varied considerably; sometimes it has been by way of lending money; sometimes by taking ordinary shares in an enterprise in a developing country; very often by carrying out its own projects or projects in partnerships with organisations and overseas companies; and sometimes with the World Bank and subsidiaries of British banks; and in one case even with a district council in Kenya.
The scope of the work can be divided as follows: about half the activities are in the field of public utilities such as water supplies and power supplies, and included in that category are a number of important housing projects. About half of the remainder is in agriculture and half in industry with particular emphasis on basic industries such as mining, the fertiliser industry, the cement industry and industries of that sort; and there has been growth in the hotel industry and other aspects of tourism.
One of the great values of the Corporation's work is that it has particularly


favoured projects in which it can work in association with the people of the country concerned. We have seen examples in which C.D.C. capital has been employed alongside local capital and C.D.C. managers have been working alongside local managers and local entrepreneurs. This has had a multiplying effect and has given scope to employment of local capital and local sources of ability in management and specialised skills which might not have been able to operate separately. I pay tribute to the C.D.C's activity especially in management and the very important work it has done in training local personnel in all kinds of jobs, including management at various levels.
Quite apart from the success of the enterprises themselves, they are helping to fill a serious gap in the development programmes of many of the countries concerned. All of us who have studied these problems recognise the chronic difficulties of training and education in vocational subjects in so many developing countries. In order to tackle those problems a number of different techniques must be used. It is relatively easy to bring people away to attend courses in colleges, universities and so on. It is not too difficult sometimes to bring them from developing countries and attach them to firms and organisations in this country or in other developed countries, although this is not being done as extensively as one would like. But the most valuable form of training is on the job in their own country, in their own environment, gaining experience that they can use as time goes on.
This kind of training is available through the C.D.C.'s operations. For example, the two major mortgage companies that it formed in Malaysia are now staffed entirely by local people. The very successful hotel it started in Nigeria is also now almost entirely staffed by local people. There are a number of examples in Africa and elsewhere of enterprises now entirely managed by local people. The typical C.D.C. success story is one in which the management has passed by stages to people in the country concerned, and where very often the ownership of assets has also been transferred by stages.
One very good example is the Lobatsi abattoir in Botswana, built and opened by the C.D.C. in 1954. It took steps to

help develop markets in this country and other European countries for the export of carcases from what was then Bechuanaland. It later associated the Bechuanaland Government with the enterprise, and also associated with it a trust representing local cattle farmers. In February, 1966, after reaching a new record level of the export of 150,000 carcases in one year, it handed the enterprise over to a new State corporation in Botswana, although it left the C.D.C. money there for the time being as a loan, and agreed to provide a manager for a further three years. This is an example not merely of a successful enterprise but of local people being associated from the beginning and gradually taking over more and more the ownership and control of the enterprise.
I could take a long time quoting success stories. I shall refrain from doing so because many hon. Members want to speak. But I should like to quote one example from the Corporation's activities in housing, because not many development agencies are yet operating in housing at all. But housing is a very important part of development, and the work that has been done by the C.D.C. is of particular value here. As one example, in Jamaica it went into partnership with an insurance company to form the Caribbean Housing Finance Corporation and provided finance for home ownership, which I am told has now extended to 4,300 families in and around Kingston, living in three major housing estates and several smaller ones built by local building firms with the encouragement and co-operation of the C.D.C.
Anyone who knows Kingston and its grave housing problem will realise what an important contribution this is. I understand that the houses have been built at a cost which brings them within the reach of the manual workers, which is very important. I am advised by the C.D.C. that it hopes to extend this kind of operation to many of the smaller countries of the Eastern Caribbean. This will be a most important development when it takes place.
I only wish that success stories of this kind could be better known. One of the most depressing aspects of this whole subject—and I speak not merely of C.D.C. development but of development generally—is that the full spotlight of


publicity is applied only to the occasional failure and that success stories are not sufficiently well known in countries like ours. The world Press could find that in these activities there are stories to be told of great human interest in terms of their impact on people's lives as well as in terms of the success of those who have managed and organised them.
The Bill is short, simple and straightforward it has two main purposes. Clause 1 raises the limits within which the C.D.C. can borrow. There are, and will continue to be, two relevant limits. First, there is the limit to what can be borrowed from the Government. The figure I am giving here is the sum outstanding. In other words, it is the figure arrived at by taking the total borrowed, less the total repaid. That limit, which now stands at £130 million, is raised under Clause 1 to £205 million, and the Clause also contains the power for this to be raised by statutory order to £240 million. The order would require an affirmative resolution of the House.
There there is a higher total limit, which represents the total sum that it can have outstanding. That is the amount it has borrowed from the Government plus any medium or long-term borrowing on the market. The present sum is £150 million, which is to be raised to £225 million, with the power to extend it by order to £260 million. Without these extensions the Corporation would probably reach its existing limits quite early next year. With the extensions, it will have sufficient cover for its likely operations for up to seven years without using the power to make an order, and probably about 10 years if one takes the higher figures that could be brought about by using the statutory instrument power.
Clause 2 removes the existing geographical limits on the operations of the C.D.C. In 1948 the Overseas Resources Development Act confined its operations to the colonies. The 1959 Act empowered it to operate in an independent territory but only where the approval of the Secretary of State had been given for a specific project while the territory was still a colony. This was a very limited power to continue operations after independence.
A larger change was made in 1963, when the title was changed to the Commonwealth Development Corporation. The Corporation was empowered to operate in Commonwealth countries that had become independent since 1948. This still excluded large parts of the Commonwealth, particularly India, Pakistan and Ceylon, and it also excluded developing countries outside the Commonwealth.
It is absolutely right that we should be making this change at this time. This country's rôle in assisting development is not confined to the Commonwealth. Part of our bilateral and part of our multilateral aid goes to non-Commonwealth countries. Although most of our programme remains in the Commonwealth for perfectly sound reasons, our aid programme generally is part of a world-wide effort, part of the relationship between the developed and developing countries. Therefore, it is logical that the C.D.C., as one of the most important instruments of that programme, should be able to operate in non-Commonwealth countries.
The Clause empowers the Minister of Overseas Development to direct the C.D.C. to seek his approval for any new country in which it wishes to operate, and it also empowers him to attach conditions to any such approval. I intend to activate that power if and when Parliament sees fit to pass this legislation, but it will be the same power as already exists and operates for independent Commonwealth countries. It is no different from that and will operate in a similar way.
I wish to make it clear that, as I see the future, the C.D.C. will remain very much Commonwealth-orientated for a long time. Most of its activities for the foreseeable future will be in the Commonwealth; any activities outside the Commonwealth will form only a small proportion of the whole. For that reason I see no reason whatever to change the name of the Commonwealth Development Corporation. Any change of name would be regretted by those who have admired it over the years, and it would be a pity to think in terms of making any change of name.
What could well happen is extension of its activities to non-Commonwealth countries which geographically are close


to Commonwealth countries in which the Corporation already operates and in which its regional staff already has relevant experience. The regional staff of the C.D.C. is one of the sources of its strength. It has decentralised a good deal of its responsibility to regional offices, which work very effectively.
The chairman of the C.D.C., Lord Howick, when giving evidence to the Estimates Committee on 30th April, gave some examples of the way in which this extension may take effect. He said that it might be appropriate to work in the Sudan, or Ethiopia, where conditions would be in some respects similar to East African countries where the C.D.C. already operates or, similarly, it might be worth while to work in Thailand, which has certain similarities with Malaysia where the C.D.C. already operates.
The Estimates Committee suggested that the C.D.C. should play a part in the Indian sub-continent. The Clause would remove any legal barriers to this, but I think it unlikely that this will be practicable in the future. There would be formidable problems in terms of finance and manpower if the C.D.C. were to make a significant contribution in countries such as India and Pakistan. There would be many problems involved before it would be able to contemplate that.

Mr. Eldon Griffiths: Could the Minister make it clear that the reason for extending the functions beyond Commonwealth countries, presumably to adjacent or similar territories, is primarily that that aid is necessary as a consequence of activities taking place in the Commonwealth countries? I am anxious that he should meet the criticism that money is being denied to certain members of the Commonwealth while being provided to nonmembers of the Commonwealth.

Mr. Prentice: There would be circumstances in which activities in Commonwealth countries were also activities in non-Commonwealth countries. For example, there might be a communications system in a region which overlapped a number of countries. Then this idea would certainly apply. I do not, however, wish to give the impression that operators in certain non-Commonwealth countries would be confined to that kind

of example. There might be good reasons within the normal criteria of the C.D.C. for operating in non-Commonwealth countries in order to help a development there, and because its experience and resources were suited to a particular need. It could then seek the Minister's leave to operate in another country. This would be a feasible proposition.
It runs in parallel with the fact that our Government aid programme is no longer confined to the Commonwealth. We give aid to non-Commonwealth countries, just as other European countries provide aid to Commonwealth countries. This is a proper development.
Subsections (3) and (4) of Clause 2 are consequential on the two main purposes which I have mentioned. Therefore I do not propose to take up the time of the House on Second Reading in discussing them. Any points can be raised at future stages of the Bill.
I commend the Bill to the House. It will enable the C.D.C. to continue the very good work to which I have referred and to which so many tributes have been paid. The success stories which I and others have quoted as they affect C.D.C. over the years have been made possible only by the people involved. All concerned in these matters would pay tribute to those who have served on the board and to the staff of the C.D.C. at all levels for the work which they have been doing and are continuing to do in this remarkable organisation.
One of the remarkable features of the organisation is that ever since 1950 the C.D.C. has had only two Chairmen, Lord Reith from 1950 to 1959 and Lord Howick from then until the present. The organisation itself, the developing world and we in this country owe a great deal to the devoted work of those two remarkable men. The House will want to see C.D.C. go on to further success in the future. I believe that this Bill when it becomes law will help it to do so.

7.56 p.m.

Mr. Bernard Braine: Before I address myself to the Bill, I hope the House will permit me to join with the right hon. Gentleman in welcoming the setting up of the new Select Committee on Aid and Development. I am sure that it will prove a most


effective instrument in spreading understanding of what aid and development are all about, while acting as a spur to the Minister and his advisers. I look forward eagerly to the work of this new body.
I am sure the whole House will be grateful to the Minister for his clear explanation of the Bill and of the activities of the Corporation. We on this side of the House give our support to the Bill and we should like to join in the tribute with which the Minister ended his remarks to the chairman, the members of the board and to the staff of what he truly described as a remarkable organisation.
I have watched the C.D.C. almost from its inception. Over the years I have been more fortunate than most in this House to see it actually in operation in many different parts of the world. Indeed, on looking through the Corporation's last annual report I was amazed at the number of projects which it began, or in which it had a share, that I have actually managed to see at first hand. These included the abattoirs and cattle ranches in Botswanaland; a cement works in Zambia; the famous copper mine at Kelenbe and the cement works at Tororo, which I confess I have been round twice; housing schemes financed through building societies in Kenya, Malaya, Borneo and Jamaica; and the splendid forestry project, which owes so much to the work of Lord Howick himself when Resident Commissioner in Swaziland, which laid the foundation of a successful pulp industry in that country, and also irrigation and railway developments there too.
I am glad to be reminded—I say this in all modesty—that when I was an Under-Secretary at the Commonwealth Relations Office I had a hand in authorising the building of the Swaziland railway, which is opening up for that country massive mineral exports. I have seen many more projects which have been successfully sold off to private enterprise and are now flourishing in the hands of the people of the countries concerned.
I agree entirely with the Estimates Committee when they concluded last year that this great public corporation had fully justified the trust placed in it. I agree with them and with the remarks attributed to the late Sir Andrew Cohen,

whose death was such a great loss to the work of overseas development, that the C.D.C. provides as efficient an instrument of aid to developing countries as any in the world. I am sure that is absolutely true.
It had its early difficulties when it was known as the Colonial Development Corporation and it had to learn from experience. But the point is that it did learn from experience. I agree, therefore, in accordance with the principle that it is always wise to build upon success, that we should make it possible for the Corporation to expand its activities and to bring its very remarkable fund of expertise to more countries. There are a number of reasons for saying this. I do not believe that aid should be regarded purely as a philanthropic exercise. If it is to be effective it must be designed to help the developing countries help themselves so that at the end of the day they stand on their own feet.
As the Estimates Committee remarked, there are four aspects of the Corporation's work which are particularly valuable. First it decentralises its work so that the full responsibility for aid management is given to the man in the field. One cannot conduct overseas development by remote control. No two developing countries are alike. This is why increasingly private companies operating overseas have switched from the branch type of organisation, which at the turn of the century was the general rule, to the locally-registered company with local participation.

Mr. John Tilney: No thanks to the Chancellor.

Mr. Braine: I was seeking to avoid making any partisan observation of that kind, but as my hon. Friend said it seems an unfortunate fact that British overseas enterprise, as it moves towards this twentieth century conception of partnership is penalised by the Chancellor for doing so. Perhaps my hon. Friend will raise that later if he can keep within the rules of order.
The success of the C.D.C. owes a great deal to the flexibility of its organisation. The second reason why its work is so valuable is that it attaches much importance to the training of local people foi management. I was delighted to hear the


hon. Gentleman laying great emphasis on training. This is a valuable contribution to development. What is more it is appreciated by the developing countries. A quotation from Mr. Tom Mboya, known to many of us, was given in evidence to the Estimates Committee. He said:
The vital thing you,"—
that is the C.D.C.—
do for us to is to train our young men actually on the job, so they become practical managers. I do not know where else we could get that.
Thirdly, there is the essential link provided by the Corporation between public and private investment, and fourthly, because of its non-political status, it seems to find it easier to deal with the authorities in developing countries than Her Majesty's Government.
What is particularly attractive to my hon. Friends and myself is that the Corporation, at a time when aid management is under much fire and there is some evidence of wastefulness, is required to act on a businesslike basis. It spreads its investments over a wide range of projects essential to developing countries, such as water supplies, transportation, housing finance; it provides capital for the development of agriculture, ranching, mining and the introduction of basic manufacturing.
I turn now to the provisions of the Bill. I have no comment to make on the extension of the Corporation's borrowing powers. What is proposed seems eminently sensible. The provision should be adequate for the next five to seven years, and it is always open to the Corporation to ask for more capital if it can justify the need. But we should consider, Land I have a feeling that hon. Members on both sides may wish to do this, the relationship between the C.D.C. and OUT total aid effort. It is astonishing but true that this type of development aid not only has no adverse effect on our balance of payments—an argument often used here and in other donor countries for limiting aid—but the very reverse.
It is worth reminding the House of the facts. In comparing its performance with other forms of British overseas investment, the Corporation says in paragraph 11 of the Reports and Accounts for 1967 that

… the C.D.C.'s revenue from its projects and investment was of the order of 6¼ per cent. on a total investment of £114 million without making any allowance for the quite considerable part of that investment which was represented by projects in the development stage and thus not as yet revenue earners. Remittances back to the U.K. in respect of revenue profits and capital realisations again more than balanced new overseas investment from U.K. On top of this U.K. exports were stimulated by an estimated £13·7 million.
It goes on to say that the activities of the C.D.C. were responsible for stimulating an additional £45 million worth of overseas exports, without taking account of the large import saving attributable to local industries that C.D.C. investment is supporting.
This really is development, and it is development which is highly profitable to the British economy. I doubt whether a different story will be told for 1968. Since it is clear that every penny we invest in C.D.C. is well invested, it begs the question whether a higher proportion of our total aid effort ought not to be directed into this particular channel, profitable as it is to Britain and immensely valuable as it is to the developing countries.
Here, I think, it would be appropriate to mention that the Overseas Development Institute, a body all of us interested in aid have come to respect very much, has made a serious criticism.
In a statement issued on Monday the O.D.I. says that:
The feature about the C.D.C. most open to criticism is the manner of its financing in relation to the ceiling on aid expenditure. Advances to the Corporation count as part of the aid ceiling but repayments to the Treasury are not deducted. This is the case with all aid loans but there is an important difference between normal aid loans and advances to the C.D.C. Nearly all normal aid loans are given on soft terms and the value of repayments is therefore lower than the value of the original loan. In the case of C.D.C. however … the Treasury gets back all of its money together with a full commercial rate of interest. The rate of interest is in fact the rate at which the Government is able to borrow the money plus a small margin. No loss therefore falls upon Her Majesty's Government and it therefore seems so wrong to count the out-payments as aid without making allowance for the receipt of repayments. Only the difference between these two constitute genuine expenditure. The effect of the present procedure is to exaggerate Britain's aid expenditure. This effect will be increased as the C.D.C. operations expand as recommended by the Estimates Committee and approved by the Minister.


This is a justifiable criticism of our aid statistics. I cannot help feeling that we need to look again at the way in which we present the actual outlay of money for the purposes of development, including the indispensable contribution made to development by private investment. It does not make much sense to count a grant for an overseas Government to buy, say, buses in this country as aid yet to exclude the investment a private company may make in building a factory overseas in partnership with local interests or the local government to make the buses there.
The second investment may be of far greater value, a more effective way of helping a developing country than the first; yet the first is included in the aid statistics, as I understand it, and the second is not. As the O.D.I. says, the picture presented is confused and confusing. I hope that the Minister will consider this; perhaps the Parliamentary Secretary can say something about it tonight. I hope that the Minister will consider how the picture can be improved. We on this side are not solely concerned with how good the figures look and what proportion they represent of the gross national product. What the C.D.C. does with so little strain on the balance of payments may be vastly more valuable to a developing country than grants of money, or even the provision of technical assistance as such which is wasted because of poor aid management in the field. It is not the money that matters, it is the results achieved.
One can at least say of the C.D.C. nowadays that it operates successful ventures or that it is operating new ones which will acquire their own momentum, training local people in the difficult but indispensable art of management, creating a demand for local components and services. In the process, as the figures I have quoted show, it is stimulating demand for more British exports.
In January I had the good fortune to meet Monsieur André Philip, the distinguished Frenchman who heads the Development Centre of O.E.C.D. in Paris. He told me that in his view the most pressing need in most developing countries now, especially where there has already been considerable investment in infrastructure, was investment in a large

number of small enterprises; that this was the way to broaden the base of the economy, stimulate real growth and get wider participation in it by the people of the developing countries.
I was most interested to hear what the right hon. Gentleman had to say about participation. I agree with his approach to this problem, but people should be enabled in the developing countries themselves to participate. This can be done only by investment in a large number of relatively small concerns. I am delighted to see that C.D.C. investment has been recently increasingly directed to projects which involve association with and the support of people collectively and individually in the countries where it operates; projects such as smallholder schemes of agriculture grouped round a commercially-run organisation, the kind of thing many of us have seen run so successfully in Israel; development companies which give investment help to the small local entrepreneur. This is the right approach.
I turn to the second provision in the Bill, the extension of the Corporation's operations to the whole of the Commonwealth and also to foreign countries. I welcome this, but with some reservations. The extent to which we are increasing the Corporation's borrowing powers does not indicate to me that it will be able to branch out in a great many directions all at once. On the contrary, if the Corporation follows the path it has trod so successfully thus far it will be cautious in venturing into too many new territories. It is right for the Corporation to be given an opportunity to operate for the first time in India, Pakistan and Ceylon if it so wishes and if circumstances are favourable. I understand some of the difficulties here, but after all, it is only by an historic accident that these three countries acquired Dominion status before the Colonial Development Corporation, as it was then, came into being.
If we pass the Bill the Corporation will be able to operate in any part of the Commonwealth, though I believe the spirit of Parliament's intention is and must continue to be that it operates only in those countries which are at an early stage of their economic development and where this is also in line with essential British interests. As perhaps the right


hon. Gentleman will have sensed by what was said by hon. Gentlemen behind me, there is so much development to do inside the Commonwealth, to which most of us still give conscious preference in our minds, that there is really no need to operate outside it. I support the right hon. Gentleman however, for there is, I think, a case for empowering the Corporation to operate in territories which were formerly part of the British Empire, places like Sudan and the Cameroons which as a result of the chance of history are now outside the Commonwealth.
I believe too that there is a case for operating in a country like Ethiopia, because of its close proximity to Kenya, Uganda and Tanzania where the Corporation is already well established. This, perhaps, is the answer I would give to my hon. Friend. Although such an investment may not be directly related to an enterprise of a similar character in neighbouring Kenya or Uganda, nevertheless the whole East African region is moving towards a natural economic grouping_ Moreover, Ethiopia is a country that I know as well as any in Africa, and it has enormous potential. It would like very much to attract British investment. I believe, therefore, that it would be a good thing if the C.D.C. were to seek to take a modest hand in development there. Having said that, however, I was glad to hear the right hon. Gentleman say, in effect, that there would be no wild rush into foreign ventures while there are needs in the Commonwealth remaining unsatisfied.

Mr. Eldon Griffiths: There are so many things requiring action in the Commonwealth that preference ought to remain. As the hon. Gentleman has rightly said, where there is a regional complexion in relation to Commonwealth countries that is right; but that is not what Parliament is being asked to say. We are being asked to say the Corporation can go anywhere under the sun, and I should have thought it was reasonable that where it goes entirely outside of former or present British interests the Corporation should come back to the House and ask for permission.

Mr. Braine: I have two comments to make on that. First, I added a very important qualification, that the test should be the advancement of British interests;

that is to say, that as our resources are scarce we should apply them where they are most effective to the needs of developing countries but at the same time should have regard to our own long-term commercial interests. I believe that this is certainly what our constituents expect of us. The other comment I would make is that the Bill gives the Minister power to give a direction to the Corporation should it have a sudden rush of blood to the head and desire to move into a foreign country in which it has not operated before. The Minister can give the Corporation a direction requiring it to obtain his approval before operation in any country other than a colonial territory; and he may attach conditions to that approval.
The Minister is an eminently reasonable man and the Corporation hitherto has shown great judgment and caution on the one hand and a suitable sense of adventure on the others. I do not believe that this is anything we need to worry over, for there is a safeguard. What is the new Select Committee to do but to subject matters of this kind to far closer scrutiny than has been the case before?
It occurs to me, finally—and I agree entirely with the right hon. Gentleman here—that there is no need to change the name of the Commonwealth Development Corporation. It is a good name. It is a name which has an aura of success around it. But there might be some difficulty if the Corporation were to operate under this name in certain countries. It may well he that I am exaggerating the danger but, as we all know, nationalisms—some of which are not very far away from us—are very sensitive nowadays. Presumably, if the danger ever arose a formula could be found whereby the Corporation could operate, if necessary, through an appropriately named subsidiary. Perhaps the Parliamentary Secretary will make some comment on that when he comes to make his reply.
Let me once again say that we on this side warmly welcome the Bill. We acknowledge the splendid work that the chairman, board and staff of this Corporation have done up to now. We hope that with the increased funds now made available they will be able to continue the good work of helping developing countries in the Commonwealth, and now perhaps a few outside it, to overcome


the problems of poverty and to speed growth of their economies. I, too, commend the Bill to the House.

8.20 p.m.

Mr. Frank Judd: Not for the first time, it is a great pleasure to follow the hon. Member for Essex, South-East (Mr. Braine), who has an extremely constructive approach to the subjects which we discuss during these debates. We have noted that the hon. Gentleman is to be a member of the new Select Committee, and I think that the tone of his remarks augurs well for the constructive way in which the Committee will go about its very important task.
I, too, should like to start by congratulating the Commonwealth Development Corporation on its outstanding record, and the way in which it has combined first-class commercial principles with a high sense of social responsibility and has not been hesitant about experimenting in new forms of development. Some would claim that the fact that the World Bank has at last become interested in supporting agricultural products is a result of the example of the C.D.C.
What has always impressed me from the limited amount of the Corporation's work that I have been able to see at first hand is the high standard that it sets in all aspects of its projects. Not many months ago I was able to see some of its work in Swaziland. I was able to visit one of the sugar estates there under the control of the Corporation. This combination of high standards was to be seen in the new techniques being pioneered, the exemplary conditions within the mill itself, and, perhaps as important as any of the technical activities in the project, the high standard of housing for the employees in the scheme, and the excellent recreational amenities, setting a good example to others in the same sphere of work.
While in Swaziland I was able to visit the Vuvulane irrigated farms, and I saw how the Corporation, in trying to avoid the danger of over-emphasis on capital-intensive operations about which some of us have certain reservations, had gone in for labour-intensive rural development by setting up these farms, both 16 and 8 acre smallholdings for Swazi farmers based on sugar cane growing, and also

five rather larger farms, of 60-acre size, for Swazi farmers. Both in this project of rural development and in the sugar estate itself the calibre of the Corporation's staff was impressive, and that cannot be over-emphasised.
As my right hon. Friend has emphasised, the Bill foresees potential expansion in the work and sphere of operations of the Corporation. I believe that this makes good sense, because integrated regional economic development is essential for progress in most developing countries. Where this can be achieved by going beyond the formal boundaries of the Commonwealth as such, this will obviously be in the interests of the Commonwealth countries within which the C.D.C. may already be operating.
We note with some relief, however, that there is to be an element of political control over new areas of activity, and that the Minister is to be able to exercise his guidance. I think that we would all want to put on record our concern that wider political considerations should not be forgotten.
There are attractive elements in regional development in Southern Africa, but I am sure that we would want to see the Minister restraining—I am not suggesting that it would be forthcoming—any tendency by the Corporation to go for economically attractive projects in areas with which we cannot have much political sympathy. For example, we would not at this juncture want to see C.D.C. schemes operating in Portuguese territories of Southern Africa.
On the other hand, while still looking at Southern Africa, it is worth noting that Botswana is a country to which we would like to see the C.D.C. give urgent attention in order to increase its activities. Recent mineral surveys in Botswana have revealed great potential wealth, and I think that there is an excellent opportunity for the Corporation, amongst others, to provide the sort of co-operation which will enable that country to develop its economy and its potential wealth without becoming more dependent on the Republic of South Africa than it already is—to an alarming degree.
We know that the C.D.C. is expected to produce a respectable return on capital, but there are certain limited spheres in which a waiver is exercised. I should


like the Minister to comment on that area of possible work which must sometimes fall between a reasonable rate of return on capital and a complete waiver and whether there is any chance of exercising more discretion and more flexibility about projects of that kind.
I shall also be interested to hear what the Minister has to say about any initiatives which may have been taken by the C.D.C., or by himself, to persuade other developed Commonwealth countries to become involved in providing capital for the C.D.C., because, if we are talking about Commonwealth co-operation and development, this is something that deserves attention, and one would like to see some of the other more fortunate and well placed Commonwealth countries looking at the possibility of action of that kind.
I propose to refer now to the background against which we must judge the success of the C.D.C. From debates on the aid programme we know that there was a cut in January, 1967, from £225 million to £205 million, a cut of approximately 10 per cent. There was the fact that the Minister was removed from his rightful place, as some see it, in the Cabinet. There was the impact of devaluation on the aid programme. More recently, there were statements by the Chancellor of the Exchequer and the Secretary of State for Economic Affairs which indicated that we cannot see any move forward in the size of the aid programme in the next few years. Against that it is argued that, despite public pressure, the Government resisted the temptation to cut the aid programme still further after the impact of devaluation.
But in connection with the C.D.C.—and here I echo some of the things said by the hon. Member for Essex, South-East—I think we have to recognise that perhaps it has been misleading that the Government, and indeed their predecessors, have so frequently presented the aid and development programmes in gross terms. The fact is that since 1960 the G.N.P. in Britain has risen by 60 per cent., or about £15,000 million, but during the same period there has been a decrease in our net aid programme from about £151 million in 1961 to what I calculate to be about £148 million in 1968. Against that background, it was interesting that the Estimates Committee said last year that

Legislation should be introduced to extend the sphere of operations of the Commonwealth Development Corporation to India, Pakistan and Ceylon, and thereafter the proportion of the aid programme provided by way of loans to the Commonwealth Development Corporation should be considerably increased.
It is understandable that in his observations the Minister should later have said:
The Minister notes the Committee's view that it is desirable that the proportion of the aid programme provided by way of loans to the C.D.C. should be increased. This is already in hand. The funds which are being made available to C.D.C. in 1968–69 are greater than in 1967–68 and it is the Minister's intention if circumstances permit to make a further increase in 1970–71".
What are the facts? The Corporation is in reality self-financing. In spite of this, the Government like to count the advances which they make to the Corporation as part of an aid programme with no deduction for repayment and interests. Is it right that their payments should count as aid, with all that that means to the general public, in the popularly accepted sense, when they come back with full interest? In 1967, the Corporation drew £7·8 million from the Government but repaid £8·3 million—£2·8 million capital and £5·5 million interest. In 1966, it drew £7·2 million and repaid £9·9 million—£5·6 million capital and £4·3 million interest. In 1965, the two flows were approximately equivalent.
This is a very different sort of operation from the welcome new trend in the Government's general approach to overseas aid and development whereby it emphasises the importance of interest-free loans if there is to be genuine assistance as part of an aid and development programme. The Corporation had something to say about this in its 1965 Report and Accounts:
Whether the C.D.C.'s activities are regarded as part of overseas aid or as overseas investment with some flavour of aid as C.D.C. itself would maintain, clearly they have to be justified more than ever in present circumstances in relation to their impact on the U.K. and sterling area balance of payments.
That was written in 1966 at the time of reconsideration of the refinancing of the Corporation. Until 1965 there had been no formal aid ceiling and, therefore, no restriction on the amount of money which the Corporation could draw from the Government within the overall limit each year. At that time, advances were not voted annually by Parliament.
In view of the new situation, why should we not, when we are considering this Bill, ponder the possibility of making the Corporation a revolving fund? It could use its return on investments for further investment without money passing through the Government's hands. The Government could, if need arose, increase the resources of the Corporation with extra funds as they increase, if they wish, contributions to, for example, the International Development Association. Such contributions would not, strictly speaking, be grants, for if the recipient organisation were wound up the money would be repayable.
I know that when one puts forward this sort of suggestion, the response comes—if not from the Minister, then from other Government Departments of which we can think—that it is contrary to the principles of British financial policy. This is absolutely no answer to my suggestion, which would result in more realistic figures of the British aid programme being quoted to the public and the world.
I conclude by again congratulating the Commonwealth Development Corporation on its outstanding achievements to date, but at the same time begging the Government no longer to claim the work of the Corporation as part of an aid programme, with all that that means in the public eye. Why not regard it as a perfectly reasonable form of enlightened overseas investment with mutual benefits to all?

8.34 p.m.

Sir George Sinclair: I have followed the hon. Member for Portsmouth, West (Mr. Judd) before in debates on this subject, and I find myself very much in tune with the plea he has made that another look should be taken at the classification of the operations of the C.D.C.
I join in the general welcome which has been given from this side of the House to the new provisions, which follow swiftly on the recommendations of the Select Committee on Estimates. The Explanatory and Financial Memorandum contains this note of caution; it says that the Bill
is not expected to lead to a significant acceleration in the rate of investment in the near future".

I am sure that this is right, at least for a year or two. The success of the Corporation, as I see it, in recent years has been achieved by building steadily on its range of experience in different areas. If after the Bill becomes law it is invited to operate in countries in which it has no previous experience, it will no doubt wish to begin with some caution. As the Corporation gains experience in the new areas of operation, I hope that the Government of the day will welcome a sharpened increase in the pace of the Corporation's new investment where this could be useful and profitable.
I come to the subject of the classification of the Corporation's operations as aid. I have some doubts whether money advanced to the Corporation should be classified by the Government as part of their aid programme and, therefore, be subjected to the overall aid ceiling. In this I share some of the doubts expressed in the recent note by the Overseas Development Institute. In support of this I quote two passages from a rather more recent document of the Corporation than that used by my old-fashioned friend from Portsmouth, West. This is the current edition of a pamphlet called "Partners in Development". The first passage, under "Terms of reference", says:
In general, C.D.C's task is to work as a commercial organisation, investing its funds in development schemes for the promotion or expansion of economic projects that will not only help to increase the wealth of the territories but will also yield a reasonable return on the money invested.
Again, speaking of its investment methods the Corporation says:
The Corporation does not offer aid: it offers investment in the development of resources.
It could not be clearer.
I doubt, then, whether it is appropriate to classify C.D.C. overseas investment as aid. After all, the Corporation has to raise its money at commercial rates. The Minister said that over new investment, at any rate for the time being, there has been a part waiver of interest. Is it a matter of principle to waive some of the interest rate, or is it a device to help the Corporation over a time of extremely high interest? I hope that the Parliamentary Secretary will clear up that point, because otherwise there is a departure from principle.
The Corporation is obliged under its Charter to operate on a commercial basis. Yet its annual returns on investment, as the hon. Member for Portsmouth, West said, have not hitherto been shown in the Government's tables as an offset against the annual investment. The C.D.C. claims to supply finance and management at the invitation of Governments of developing countries, and to be partners in management and to be partners in development. This is not aid. I doubt whether such investment should be included in our aid figures. What I have no doubt about is that such investment by the C.D.C. is one of the most valuable forms of practical help which flow from Britain to developing countries. There are great advantages in this to Britain as well as to the receiving countries. It is a transaction of common interest and this is not a bad relationship between two countries, one of which may be developed and the other developing. It is a good and natural relationship of common advantage.
Perhaps I should run again quickly over some of the advantages to the receiving countries of the C.D.C.'s operations. First, the projects are taken only at the express invitation of developing countries. I disagree with some of the phrases used in this debate about "deciding" to invest. It really amounts to considering requests from countries to invest in them. That is the rôle of the C.D.C. Second, there is joint planning between the C.D.C. and the receiving countries. This is very important because the two sides are associated right from the beginning in the working out of the project. Third, there is training in management and, often, help with technical training. Finally, the C.D.C. works as often as possible in partnership with local organisations.
But to me one of the most important parts of the work of the C.D.C. is that it is bringing modern methods of production and marketing into the rural areas and has been particularly successful in its smallholder schemes. Above all, the major contribution of the C.D.C. is that its projects have been by and large overwhelmingly successful and have helped to create new wealth in the countries which have welcomed the C.D.C.
For Britain, the C.D.C. has achieved a reasonable return on investment. As

my hon. Friend the Member for Essex, South-East (Mr. Braine) said, the investment has stimulated our exports and especially our exports of equipment. This applies very greatly to the financing of the infrastructure works in the developing countries. It may not be aid but it is certainly a civilised exchange of benefit to the common advantage. In my view, it represents a really good mature relationship.
I welcome the provisions in the Bill to extend the area of operations of the C.D.C. even beyond the Commonwealth. I am glad that the right hon. Gentleman has given an assurance, however, that the extension beyond the Commonwealth will be only marginal. The needs and opportunities for this sort of investment within the Commonwealth are so enormous that I doubt whether the C.D.C. has the capacity to expand rapidly yet into other areas. I do not think that in future we should continue the C.D.C. entirely as a Commonwealth operation because there will be areas in the world where there will be opportunities for good investment with good returns to the receiving country and good returns to our country which will strengthen our economy and thereby our ability to help our own Commonwealth. We should not neglect opportunities where the C.D.C. form of investment is particularly attractive to the receiving countries and also gives a good return to us. It does not deprive us; it helps us. But I hope that the efforts will be overwhelmingly confined to Commonwealth countries, where the C.D.C. has a steadily growing record of successes.
In Africa there is still a wide opportunity for investment. There are opportunities for useful and profitable operations in countries so far untouched by C.D.C., countries in Africa to which C.D.C. has not hitherto been allowed to go; for example, in the former French territories, where C.D.C. experience in neighbouring territories of the Commonwealth countries may be highly relevant. Such an initiative, if sought by the Governments of those countries, would follow the recent pattern of French investment in former British territories. I am thinking of the French construction of the new international airport in Ghana. If the Government of Cameroon sought new investments from C.D.C., the Corporation


would now be free to build on its past successes in a country part of which was administered by us as a Trust territory.
The Caribbean area, as was shown by the debate on Anguilla, is crying out for further development, and here I hope that the C.D.C. will be able to expand fairly rapidly, because its experience is already fully tried out and has proved to be relevant and profitable both to us and to the receiving islands.
There are other areas where C.D.C. has been remarkably successful—for example, in Malaysia and Singapore—and it may well be that there are friendly countries—I think Thailand has been mentioned—where investment opportunities would be open to us and where C.D.C. would be welcome. It would help to improve the prosperity of an area in which we have a major interest. The prosperity and tranquility of the area is of interest to us and all our partners in the area, and if we can make a contribution through C.D.C. we should do so.
In addition to this, the Bill, following the recommendation of the Select Committee, would add India, Pakistan and Ceylon, from which C.D.C. has formerly been excluded. We should not take fright at the immense needs of India and Pakistan. The opportunity there for new investment is vast, but in many sectors of the economy they want money only. They are already capable of providing their own management throughout a great range of their economy. Perhaps these two Governments of India and Pakistan, faced with the urgent and immense task of increasing still faster the productivity of their rural areas, might wish to discuss with C.D.C. the new techniques that C.D.C. has developed for assisting local groups, especially groups of smallholders, to modernise their production and marketing. This is where in most developing countries economic advance is most urgent and important.
We have heard something of the recent spectacular advances made in the production of food in Pakistan and India, especially in the larger farms in irrigated areas, advances which have been made possible by better seed, more fertilisers, better cultivation and better irrigation. It would be strange if C.D.C.'s successful experience elsewhere in helping farmers

at the peasant level to increase their production could not be modified to local conditions and help to speed the process of production in rural India and Pakistan. If the C.D.C. were to be invited by one or both of those Governments to consider the possibilities, I am sure it would require time for the very careful preliminary surveys of the social and other factors in those areas in which it might be asked to operate.
Finally, I want to join in the tribute paid from all sides of the House to the leadership and the staff of the C.D.C. I would couple with them however, their partners and associates in the territories in which they are operating, because they are partners in development.

8.55 p.m.

Mr. A. H. Macdonald: So far, we have listened to four panegyrics in favour of the C.D.C., and certainly I have no wish to be behindhand, because I am sure that those tributes are fully deserved.
I hope that I shall not strike too discordant a note if I venture to offer one or two criticisms of the Bill, though I hope that I shall be no more than a devil's advocate, because, at bottom, I wish the Bill well.
In some ways, I regret that it comes before us today. It might have been more convenient and helpful if it had come before us in a month's time or possibly two months' time. As many hon. Members have said, the C.D.C. is a commercial enterprise operating on commercial principles. When we consider its affairs, it is highly relevant to have before us the latest possible statement of its balance sheet and accounts.
All that I have been able to find is the Report for 1967, which I see was made available in May, 1968. If this discussion had taken place a month hence, it may be that we would have had available the up-to-date balance sheet and accounts, which would have made our discussion more realistic.
Operating on the latest figures available, the first point to which I want to call attention is that, in paragraph 9 of the 1967 Report, the C.D.C. remarks that there was at that time £28 million of undistributed commitments; in other


words, transactions which it had entered into and presumably signed contracts for but in respect of which no disbursements had been made. In the context of the figures which we are discussing, £28 million seems to be a fairly substantial sum. However, the C.D.C. says that it does not regard it as large, and I am glad to see the measure of confidence that it displays. If we had the 1968 figures before us, no doubt we would see a similar figure outstanding at present.
To draw a parallel, when I served on the housing advances panel of a local authority, I remember that we used to have undistributed commitments at the end of any financial year, which is quite normal to any financial organisation. But we found it very difficult to handle those undistributed commitments when we were operating on the basis of getting annual loans from the Public Works Loan Board.
The C.D.C. also used to operate on this annual loan basis But if I understand the position correctly, it has now moved away from the old concept of an annual basis. Indeed, in paragraph 9 of its report it refers to what I understand to be more of a four-year rolling programme. Therefore, it is possible that the Explanatory Memorandum may be a wee bit misleading in that it continues the concept of annual loans.
The important point arising out of this has been referred to by other hon. Members, namely, that the loans to the C.D.C. come within the overall ceiling of the total aid programme. My right hon. Friend made it clear, to my great regret, that there is to be no overall increase in the total aid programme. Assuming that this form of finance is aid—I recognise that some hon. Members dispute that—this increase presumably will mean some reduction in the other forms of aid that we make available. In particular, if this £28 million of undistributed commitments is called upon in large part rather sooner than might be expected, I fear that the reduction in other forms of aid will be appreciably greater than we might have supposed.
Hon. Members have offered thoughts to the House on whether advances to the C.D.C. should be considered as aid. I have nothing to add to the arguments that they have advanced. The Government evidently consider them as aid. I distinctly

regret that this improvement in the position of C.D.C. means a reduction elsewhere. Subject to that, I welcome Clause 1 proposing an increase in the limit of the borrowing powers under which C.D.C. operates.
I like to think that part of the money that we make available to developing countries—I will not again venture into the argument whether it is aid—takes the form of hard money, because I think that this helps to stimulate efficiency. If they can cope efficiently with hard money, it shows that they are soundly based and can efficiently use any soft money that is made available.
I am less enthusiastic about Clause 2. I cannot help feeling that we are seeing too much of a good thing here. It was not clear to me from my right hon. Friend's opening remarks why we are embarking on this extension. I share the view of hon. Members who, in interventions and speeches, have remarked that there is still plenty to do within the Commonwealth, the sphere in which C.D.C. currently operates.
I suppose that this extension is based upon the recommendation put forward recently by the Estimates Committee. I regard its report in almost every respect as thoroughly admirable, and it made interesting and useful reading; but I thought that this particular recommendation was something of a blemish on what I otherwise highly praised.
The Estimates Committee went to India and Pakistan. On its return it recommended that there should be an increase in aid, or money, to India and Pakistan. I cannot help feeling that there was an element of special pleading in it. I wonder what the Estimates Committee would have said if it had gone to Nigeria, Mauritius or even Anguilla. I wonder whether it would have come back with a slightly different conclusion.

Mr. Braine: I think that the hon. Gentleman is being a little unfair to the Estimates Committee, because if I remember rightly, it came back from India with some trenchant criticisms of the way in which aid had been used for particular projects and it was against that background that the Committee recommended that the C.D.C., with its wealth of expertness, might be encouraged to move into that field.

Mr. Macdonald: I am coming to the question of expertise, but if I have been unfair to the Estimates Committee, I am grateful to the hon. Gentleman for correcting me. Even supposing that its recommendation is correct, the Bill goes a great deal further because it permits the C.D.C. to make investments in the whole world. Restrictions in the Bill will operate only if the Minister thinks that they should, and although the present Minister has said that they will, we might have expected restraint the other way around, with the C.D.C. unable to invest in these other places unless the Minister says so. At the moment, it may invest unless he refuses and that is unfortunate.
The C.D.C., which was created in 1948, has built up a magnificent body of expertise by its slow and patient development and I hope that I am not pessimistic in feeling that there may be a danger of its being dissipated, if it is spread too widely.
One of the great merits of the C.D.C. is that it trains local people to assist in the management of its enterprises, but I am also advised that, although it does a lot in training, its enterprises lose many of those trained people, because, as Mr. Mboya has said, there is no other way of training them. When C.D.C.-sponsored organisations train these managers, they later move on. There needs to be continuous training, with some ex-patriates taking part.
Paragraph 8 of the 1967 Report mentions certain difficulties for expatriates in Commonwealth territories but I hope that the success of C.D.C. shows that these difficulties can be largely overcome, because, in those territories, the Corporation is known and the circumstances of those expatriates are understood. If they go in large numbers to other territories where they are not known, these difficulties may increase. I welcome Clause 1, but I should have liked the increase in the finance, without the large extension in the area under Clause 2. There is plenty to do in the exisiting Commonwealth.
I hope that I am not out of order in assuming that this debate is an opportunity to review the work of the C.D.C., to which I pay tribute.
In its Report for 1967 it refers particularly to the affairs of the Central Africa

Power Corporation where money was made available but, because of the difficulties in Rhodesia, only half was repaid. Half was guaranteed by the Government of Zambia and that was paid, but the other half was guaranteed by Rhodesia and has not been paid. As the two Governments had given cross guarantees, the C.D.C. called on the Zambian authorities to make good the total repayment. In doing so it was acting in accordance with its brief as it is a commercial organisation. I have no criticism to make of that, but here we are setting up a commercial organisation which in some senses was apparently cutting across the political policy of the Government.
I wonder if I detected in the increasing waiver of interest which my hon. Friend rather proudly announced a departure from commercial principles hitherto laid down. I wonder whether the opportunity should have been taken to deal with these circumstances in this Bill. I thought it a little unfortunate that the C.D.C., operating on a commercial basis, came down on the Government of Zambia for the full amount of the money. Although it was in no sense the fault of that Government, it had to make good the full amount. I would have expected that some opportunity would have been taken in this Bill to introduce safeguards against that kind of thing. Subject to that, I welcome the proposals of the Bill.

9.7 p.m.

Mr. John Tilney: I had some sympathy with the words of the hon. Member for Chislehurst (Mr. Macdonald) when he said that he thought the money might be spread too widely. He spent a certain amount of time on the £28 million of undistributed commitments. I have always felt that because the C.D.C. takes risks the capital should be equity capital. It has always struck me as wrong to rely on loan capital when one is taking risks all the time.
Although my hon. Friend the Member for Dorking (Sir G. Sinclair) said that the C.D.C. had been overwhelmingly successful, I remember the time when under the first chairman success was very far away from the C.D.C. and vast sums of money were lost by not so good management. Risks have to be taken either in agriculture or in industry.
I was much interested to hear what was said by the hon. Member for Portsmouth, West (Mr. Judd). He and I not long ago were discussing the problems of Africa with various American congressmen and senators and, inter alia, the subject of aid to that great continent. I was interested in what the hon. Member said about the effect which C.D.C. projects in agriculture have had on World Bank thinking. I have no doubt that some developing countries in the past have not given enough attention to agriculture. India certainly was one of those in its first development programme, whereas Taiwan, before it started its industrial burgeoning, saw that its agriculture was in order. This is a matter of great importance to such countries.
The hon. Member for Portsmouth, West thought that we might call on other Commonwealth countries for some capital for the C.D.C. This would bring the Commonwealth together more, and anything we can do to bring it together and establish the Commonwealth idea much more widely throughout the world is good. That is why I regret that to a slight extent the Bill is going away from the Commonwealth, and why I should like to see some form of Commonwealth aid scheme under the Secretary-General.
But I very much welcome the raising of the limit. I agree that the C.D.C. is a great success story and that it helps our balance of payments. There is a strong argument that this should be regarded, just as private investments should, as a form of aid overseas but as being in quite a different position from Government grants. It is nonsense to lump them together as aid, because we benefit. Our balance of payments gains from the C.D.C. to a considerable extent, as my hon. Friend the Member for Essex, South-East (Mr. Braine) pointed out.
I believe in private enterprise, in risk-taking and in partnership, and that aid should not be purely a philanthropic enterprise. It is a good thing if they are mixed up as much as possible. I pay my tribute to the management of Lord Reith and Lord Howick and the present managing director, because they have done a first-class job.
It is sensible to have a partnership. My hon. Friend the Member for Essex, South-East referred to partnership and

the importance of companies registered in the developing country rather than having a branch. I do not want to make a party point, but it is very unfortunate that our present fiscal policy is in favour of branches and against public companies sharing in partnership with local capitalists overseas. Unfortunately it now pays to have branches rather than a partnership company, either with British capitalists or local capitalists, whether they are pension funds or local tycoons. I believe such partnership is a very good thing. I happen to believe in the capitalist system. What one wants to see is the local company quoted on the local stock exchange in Lagos, Accra or wherever it may be. That is the sort of development we want to support.
I strongly recommend a small brochure produced by the West Africa Committee in the City of London, entitled, "Foreign Investment—its rôle in the development of Commonwealth West Africa", because of the four precepts for investment it lays down—investment capital, technical skills, enterprise and natural resources. It speaks of:
Investment Capital—available from savings on a scale sufficient to leave a surplus after maintenance requirements in the private and public sector.
One of the problems of developing countries is that there is very little left over once what is already there has been maintained both in the public and private sector. The brochure next mentions:
Technical Skills—to apply investment capital with economy and effectiveness, conserving it conscientiously.
That is all the more reason why bodies like the C.D.C. should bring people to this country for training, or, preferably, in their own enterprise build up the local technicians in knowledge of worldwide techniques.
The brochure also speaks of:
Enterprise—the intellectual force which provides the will, flexibility and inventiveness to adapt the best systems and experience of the world to local problems and situations.
That is self-explanatory. Finally the document mentions
Natural Resources—which are valueless until extracted and processed.
Natural resources, either mineral or agricultural, cannot be tapped without capital, expertise and hard work.
I have a suspicion that some hon. Members opposite always imagine that one must have an infrastructure and that automatically private enterprise will follow it. This is not really so. Some private enterprise has come about—with the exception of power, which one must have—before roads have been built—but the opposite is often the case. One remembers the big roads which were built by the French in Dahomey, but Dahomey remains one of the poorest countries in Africa. There private enterprise has not followed the infrastructure.

Mr. Eldon Griffiths: Is not the point that infrastructure does not mean to underdeveloped countries what it means to us? The word "infrastructure" ought to mean different things in different countries.

Mr. Tilney: I agree. So often many developing countries want to enjoy the infrastructure which we have. They are not prepared to put up with something which is not quite alpha-plus. There are good beta-plus organisations in existence, and there comes a time when they have to accept the good rather than the best.
I believe that equity investment is better for many countries than Government loans which have to be repaid. Private enterprise investment does not have to be repaid year by year. It receives a return only if it makes a profit. The risk is taken, preferably in partnership with the local people.
I regret to some extent that the Minister has seen fit in this Bill to go beyond the Commonwealth. I accept that the Sudan was a condominium largely run by this country, I accept that we have great friends in Ethiopia, and in Thailand, but I am frightened that some other Government, for political rather than economic reasons, may say to the C.D.C. "We should like to start in such and such a country." This is a dangerous argument if one goes beyond the purely economic reasons for investment. Capital is in short supply thoroughout the world. Only £10 million is available, which is not much for the Commonwealth, and once one goes outside it, I fear that the investment will be thinly spread.
One understands that aid will be going wider than the Commonwealth. The Minister said that, for the time being,

he will not consider India, Pakistan and Ceylon, although in fact they may be eligible. I urge him to listen carefully to the suggestion made by my hon. Friend the Member for Essex, South-East, that one should not use the Commonwealth Development Corporation in a foreign country since it would demote its title. I wish to support the Commonwealth as much as possible, but if it becomes accepted as the title of a body which may operate in any country, then the whole concept of Commonwealth is denigrated to some extent. If the C.D.C. is expected to operate in Thailand, in the Sudan, or elewhere outside the Commonwealth, I urge the the Minister to consider the use of a subsidiary company.
I welcome the Bill. It is a small part of the aid programme. I would like it to be bigger, as I would like the private enterprise share to be bigger, even though we have to reduce government-to-government loans. Along with all other hon. Members I commend the Bill.

9.20 p.m.

Mr. Evan Luard: I am sorry to have to add to the discordant notes mentioned by my hon. Friend the Member for Chislehurst (Mr. Macdonald). I understand the reasons why this Bill has been so wildely welcomed, and it is not my intention to vote against it. I have considerable reservations about it, not so much for what it is in itself, but because of some of the trends which it represents within the aid programme. One point which I do welcome, that which has been mainly regretted in the debate so far, is the provision in Clause 2 that it is no longer relevant or meaningful to make a distinction between a former colonial territory of this country and other territories.
I welcome the abandonment of that distinction for two reasons. From a purely economic point of view, it is often a total nonsense to draw a rigid boundary just where the previous boundary of our colonial empire happened to run. In many cases it is much better to think of projects in a sub-regional context, for example to think of the whole area in West Africa regardless of where the former colonial territories had their boundaries, or in South-East Asia, and many other parts of the world.
I also welcome this because at the moment there can sometimes be quite artificial imbalances between the amount of aid available to a particular territory, according to whether it is a member of a former colonial empire. It is increasingly important that we consider the aid programme as far as possible in a global context when considering the distribution of aid in the world as a whole, and in a regional or sub-regional context in considering the economic environment of a particular aid programme.
I come now to my points of reservation. I do not want anything I say to be considered as being criticism of the Commonwealth Development Corporation, because I echo the words of appreciation and praise for the technical expertise with which it does its work, which is so important in considering the aid projects generally. I have three points to make. Three years ago in the admirable White Paper on aid which the Government produced an undertaking was given that we would increasingly concentrate on aid on soft terms.
In doing this we give a lead, to some extent, to the world as a whole, which has recently been re-echoed in many quarters. The United Nations has passed a Resolution on this, U.N.C.T.A.D. has done so and the World Bank has laid increasing stress on aid on soft terms. The aid given through the C.D.C., in so far as it can be called aid, is not aid on soft terms. Unlike other speakers, I regret the recommendations made by the Sub-Committee of the Estimates Committee and the Committee as a whole that we should lay increasing emphasis on aid through the C.D.C. in our future aid programme for this reason, although, again, I recognise the very good reasons it gave in favour of this, and that is because of the type of aid it represented, and because of the very efficient way it is managed.
It is impossible to consider in a rational way a particular proposal for an increase in one kind of aid without knowing what proportion it is of our aid programme as a whole and what proportion it will represent in future of our total aid programme.
I am very much afraid, and I would welcome comments on this by my hon. Friend in replying tonight, that this represents part of the trend within our aid programme not to give as much

emphasis to soft loans as was suggested in the White Paper three years ago. That White Paper emphasised in particular not merely soft loans but interest-free loans. This is an essential element in our aid programme, something to which, no doubt because of our difficult balance of payments system, we have not been able to give sufficient attention in our aid programmes in the last few years.
The second reservation I wish to make is that another trend within aid of programmes as a whole which has been increasingly commended by international organisations has been the trend towards a greater volume of multilateral aid. Our own proportion, although it has been slightly increased recently, is still not much more than one-eighth of our total aid programme. This is very small compared with that of many other countries. Many have undertaken to give a very large proportion of their aid in future in multilaterial forms. Several countries, including the United States and the Scandinavian countries, give a large proportion in this form and other countries of Western Europe are proposing to give a large proportion of aid in multilateral form so long as they can receive sufficient assurance that there will be adequate management and control in the way aid is used. I entirely accept that this is an essential condition.
I am afraid, however, that this Bill, if extended to other legislation in the future, may portend that we are continuing to give a very large proportion of our aid in bilateral form, or at any rate not through multilateral agencies as a whole. I agree with my hon. Friend the Member for Chislehurst that the terms of a Bill of this kind make it difficult for the House as a whole to have any control over the proportion of aid which goes in any particular form. It gives an authorisation which will enable the Corporation in future to extend its activities in a particular way; but it gives no indication of how much this extension will be in any particular year and what proportion the extension will be of the aid programme as a whole in any particular year. Again, I regard this as a dangerous trend within the programme.
The final point I wish to make concerns the question of repayments. It is already true that a considerable proportion of the value of our aid programme is lost


so far as the developing countries are concerned because of the volume of repayment they have to make. The volume of repayments on this particular form of aid is very high. Such aid is given in purely commercial terms at very high interest rates, which means that over future years it will add very considerably to the repayments by the countries we are attempting to assist. Already some countries are paying in repayments almost as much as they are receiving in aid; and we are adding to this burden in future by proposing now to give a substantial—though not a very large—proportion of our aid programme in this form. I do not say that for these reasons we should not approve the Bill. I very much appreciate the skill with which the C.D.C. undertakes its activities. But it would be wrong to fail to consider a particular measure of this kind in the context of our aid programme as a whole and its implications for that programme. I believe that it is with these considerations in mind that the House will consider this Bill.

9.28 p.m.

Mr. Eldon Griffiths: I, too, welcome this Bill, which can be described as a slightly bigger drop in a somewhat wider bucket. One of the most difficult tasks of government is deciding between competing, often conflicting, claims on public expenditure. Certainly there is no more difficult field than having to decide on the relative merits of spending at home and spending abroad. Equally, as Members of this House, there is no more difficult task than representing, as is one's duty, the views of one's constituents and at the same time seeking to make a judgment on what is best for the country. Very often there is great difficulty in both these judgments, and I think that this Bill pre-eminently illustrates both.
In welcoming the Bill, I wish to represent the view of my constituents, and I believe the views of constituents of most hon. Members. I want to put it very plainly, because it is a nettle which needs to be grasped. In this Bill we are extending the Corporation's borrowing powers from £150 million to £250 million. Yet simultaneously in my constituency it is necessary for the Government to cut down the borrowing powers of local councils.

We are asked in this Bill to provide the means of improving roads, hotels, wells and many other things in a whole range of foreign countries—and clearly this is right. But at the same time our constituents have to face the fact that expenditure on some of their roads, schools and wells has to be cut down.
I put this plainly to the House so as to illustrate the fact—and it is a fact—that at the moment foreign aid is unpopular. Most hon. Members will have had the experience over the last year or so of going to constituency after constituency and finding puzzled and sometimes bewildered people, who ask how it is that we are able to spend money abroad whilst apparently bankrupting ourselves at home. This is the paradox, and it is a difficult one for ordinary people to understand.
In my constituency—and I am bound to represent this in the House—people inevitably draw a contrast between increasing the proportion of foreign aid on which no interest will be charged for seven years, while at the same time in Bury St. Edmunds, Newmarket, and many other places, interest rates, far from being waived, are actually being pushed up. I sympathise with the Minister, because in these circumstances I realise how difficult it must have been for him to get the Bill through the Cabinet or through whatever other process of government he has to go, before bringing it before the House. I congratulate the right hon. Gentleman on his achievement.
A few months ago when I was part of a Parliamentary delegation to the United Nations, I remember speaking to Lord Caradon. He told me how proud he had been to tell many of the underdeveloped members of the United Nations that at a time when the British people were being forced to reduce their standard of living and to go without many things we were able still to increase the proportion of money that we were to spend on foreign aid. I congratulate the Minister on that achievement. It is something of which our country can and ought to be proud.

Mr. John Cordle: I want to get this clear in my own mind. I thought the Minister made it clear, and indeed that


our Front Bench did, too, that this was not a question of straight aid but a sophisticated method of lending money overseas through a private enterprise body.

Mr. Griffiths: I am sure my hon. Friend will agree that the net effect is the same. It is to allot more of the financial resources of this country for expenditure on development in other places.

Mr. Braine: My hon. Friend's general remarks about aid are correct. We are discussing a Bill to increase the borrowing powers of an organisation, which I am sure the Minister will agree is a good sound investment for this country in that it yields a net return of 6¼ per cent. on the money invested and induces a large volume of British exports. His strictures do not apply to this form of economic activity.

Mr. Griffiths: My hon. Friend need not worry; I shall in the end come down on the side of the Bill. I feel, for all that, that it is necessary to illustrate that we have here what the public is bound to conclude is an increase in help for others at the expense of themselves. My hon. Friend with his great wisdom, may say that that is not so, but we are politicians and we must face the fact that in our constituencies people are not as well informed as he and the Minister. My point stands. We need to explain it to our constituents. If we wish to increase foreign aid, as I do, we must sell it to the people, which is not easy at this time.
There are many ways of improving the assistance which we give abroad. For example, it would be very much better if we could stabilise commodity prices. During the 1950s the under-developed parts of the world lost more in the drop of commodity prices than they gained out of all the aid they obtained from the advanced world. Another improvement would be to reduce world interest rates. We would all like to do that. They hit hardest of all at the under-developed nations we seek to help. We could also improve the character of our aid if less of it were tied and if more of it were multilateral. It would help even more if we could contain inflation in the Western world.
I wish to ask the Minister a question. The net effect of the Bill is to increase the amount of money directly available on Treasury account to the Commonwealth Development Corporation from £10 million to £11 million a year, an increase of 10 per cent. In the last 18 months we have had a devaluation of 15 per cent. I hope that the Minister who is to reply will be able to tell me that there is an increase in real terms. Does the £11 million referred to in the Bill represent an increase in real terms to the receiving countries? If it does not, we are involved, not in an increase, but in a marginal decrease.
I come now to the details of the Bill. Like the hon. Member for Chislehurst (Mr. Macdonald), I regret that we have before us the Report and Accounts of the Commonwealth Development Corporation only for 1967. That is not good enough. We should have the Report and Accounts for 1968 before we pass the Bill. Probably the reason is that normally these accounts are printed in May and we are now only in April. But I do not see why the Minister could not have persuaded the Corporation to give the House the last available accounts before he brought in the Bill.
I support Clause I wholeheartedly because it provides more money. That is what I want. I am less sure about Clause 2, because having marginally increased the size of the drop, we are apparently greatly increasing the size and width of the bucket. The question of the dilution of aid over a wider area is very difficult. I recognise the Minister's point. It would be foolish to refuse to the Corporation power to expend money in those countries which are immediately adjacent to, or which are regionally or organically part of, those Commonwealth countries to which we are contributing. It would be absurd for example to separate from one another countries in the Horn of Africa on the ground that one was Commonwealth and the other not.
Nevertheless, I think that the Parliamentary Secretary should say a little more about the terms of reference which the Corporation will be given. Clause 2(2) empowers the Minister to
give directions to the Corporation requiring it to obtain his approval … before performing functions in or in relation to any country or territory to which the principal Act applies.…".


Can we be told that the Minister will be very sparing in his agreement to Corporation proposals that go greatly beyond the old and the new Commonwealth?
In the case of Anguilla, no longer—technically at least—Her Majesty's territory, there could be no question but that it would be appropriate for the Corporation to help. If, however, the Corporation were to propose help to Rumania, that would be a case where the Minister should in no circumstances give his approval. What we need from th Treasury Bench is a rather more clearly defined general direction as to how Ministers see the problem of extending the responsibilities of C.D.C.
I agree with my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) that the old Commonweath conception has value. It has value in the world. Above all, it has value to the people of Britain. It is much easier for anyone who is in the business of selling our constituents on the need for aid if they believe that the aid is going to the Commonwealth with which they identify themselves—at least, some of them do—rather than going to a miscellaneous collection of foreign countries whose need may be great but with which the British people have very little historical affinity.
If the jam is thin, the Corporation in the past has spread it very well. I only hope that it will not have to spread it so thin that it ceases to taste so sweet.
I make these further suggestions which I hope will be considered in Committee. First, I hope that, as the Minister said, there will be much more training on the ground in recipient countries. I should like to feel that the Corporation will encourage more young people from Britain to go out and perform that training, because not only is that good for the recipients, it is even better for those who give.
Secondly, I hope that we can achieve a somewhat better co-ordination between the activities of the Corporation and those of other countries' aid giving bodies. At the moment the world is strewn with Governmental aid givers. This is a good thing, but frequently they overlap, and sometimes there is waste because of duplication. All of us have seen examples of this.
I am most impressed by a suggestion which was made by Miss Barbara Ward to the effect that a great deal of information—on techniques of improving food production and in helping under-developed countries—is available in Washington, in London, and in Paris, but is not known in all three places. It is necessary for new techniques that have been learned by one country, for example, in improving fishing or silviculture, to be made known among all the giving nations. This is a field where the computer can be of considerable value in information retrieval among the various aid programmes so that some of the overlap can be avoided.
Thirdly, I hope that in his general power to give directions the Minister will consider one or two areas which are of special importance to Britain. I am sure that we have a special responsibility for the Caribbean, as my hon. Friend the Member for Dorking (Sir G. Sinclair) so eloquently said. I was recently in the Cocos Islands. Water there is 1s. a gallon. We should be able to get that price down and I hope the C.D.C. will consider this. In the Cayman Islands too there is real need for additional help.
I end with the thought that if foreign aid or Commonwealth aid through the C.D.C. or anything else is to succeed, it will succeed because the British people, our constituents, have been persuaded that it is in the best interests of this country. We have a selling job to do. I believe that job can partly be done on the basis of our balance of payments but very much better done on a wider frame.
The problem of my generation has been the threat of aggressive war, first, from Hitler's Germany and then from Stalin's Russia. It may be, thanks to the thermo-nuclear bomb, that the threat of aggressive war is now disappearing. I pray that this is so. But I believe that the nuclear threat is being replaced by another—the rise of the barefoot people, already some 2,000 million strong. Having thrown off the old empires of Europe, they find themselves still subject to the even older tyrannies of poverty, ignorance and disease yet they are reaching for their place in the sun. They find that they have achieved independence but are still not free. They


are more subject, if anything, to the old tyrannies than they were before.
This is the line of argument to strike a chord in the British people. Particularly can it strike a chord among the young. In supporting the Bill while criticising it in part, I hope that the right hon. Gentleman, the Government and all right hon. and hon. Members will try to sell the idea of foreign aid to our people not solely in terms of the balance of payments or as something into which we are chivvied by the United Nations or even by our Methodist clergy. I hope that they will do it on the wider frame that the problem of tomorrow is to bridge the gap between the poor and the rich and to see that this gap is not widened by the fact of race and colour. If we sell it in this larger frame, I believe that the British people will respond.

9.48 p.m.

Mr. John Cordle: The eloquent speech of my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) has covered a great deal of ground, and the House will be grateful to him for drawing attention to the difficulty of selling overseas aid to one's own constituents. It is right to say that one could approach the problem by making it clear to one's constituents that, although the C.D.C. has its finances from the Government, it is nothing more nor less than a commercial undertaking which is using those funds to the benefit of the country.
Perhaps a clearer definition could be made of how the C.D.C. functions, and greater publicity given to it throughout the country in more simple terms. I have no reservations about the Bill. It should be welcomed and acted upon and given every possible help and scope. I hope that no difficulties will stand in the way.
I have the rather old-fashioned idea of believing that the more we give overseas the greater will be the return.
… for whatsoever a man soweth, that shall he also reap.
We sow overseas additional funds by foreign investment. We shall get our returns in due course—and they are profitable returns. It has been said that aid helps our balance of payments, and during these difficult days I think that

it can maintain a stability for our overseas investment and future well being.
This evening we have heard the success story of the C.D.C., and about the amazing achievement that has taken place in a short time, and we have heard, too, of its failures. We now know that it has proved itself worthy and has won its spurs. This country and the countries in which it operates have a great deal of confidence in it.
Many excellent suggestions have been made and I should like to make one or two. In the old days trade followed the flag, but nowadays trade follows sensible investment and the application of commercial "know-how". Wherever C.D.C. gets a footing it is showing that it can run its affairs efficiently and profitably.
Several times in the last six months I have visited Nigera. I have stayed in hotels run by the C.D.C., and I have seen what has been done for agriculture, the industrial bank and the housing programme, both in the North and in the South. All these are splendid developments. The C.D.C., as I say, is the spearhead of business in Nigeria. We have heard of the developments that have taken place in Botswana, Lesotho and Swaziland, and of those that are taking place in Malawi.
I ask the Minister to consider a wider scope of activity for C.D.C. As a businessman I have seen the success of C.D.C., and I wonder whether a service could be rendered to businessmen. They no longer sit at their desks expecting business to come to them but must go out to seek business overseas. Such a service would be of great benefit. The businessman cannot always fall back on trade missions and the commissions which are set up; he wants information from people who are thoroughly experienced and who know the territory. The C.D.C. has a special advantage here in its experience in the initial stages of getting a project off the ground, and advice in these matters to a businessman overseas would be invaluable.
The Ford Foundation, with its vast financial resources, recently set up a conference to look into the development and reconstruction of Nigeria after the war. This suggests to me that money would be well spent if such conferences could be sponsored and undertaken by C.D.C. in countries in which it is operating.
The Board of Trade has sponsored many successful exhibitions in various parts of the world. The recent exhibition in Beirut of hospital installations and equipment paid off extremely well, and resulted in much business in the Near East. Such exhibitions sponsored by C.D.C. in Commonwealth countries would provide an extra outlet for exports and so help our balance of payments. I fear that I may be wandering away from the Bill, but to secure the best results from the C.D.C. a sound long-term appraisal of potential markets will be needed if it is to continue its highly profitable life. This is one way in which it can further its cause as it grows. We all hope that it will.
In the context of taking reasonable commercial advantage of the opportunities provided by our aid to developing countries, it should be noted that the equipment and consumer goods which we are able to provide possibly contribute as much to the development of their economies as straightforward capital investment. Therefore, we shall not only do ourselves a service by expanding more and helping the balance of payments, but we shall make a valuable contribution to the countries concerned.
Those of us who travel to the underdeveloped countries realise that they want a short cut to the standard of living which we in the West take for granted. The markets are wide open for development both in the provision of goods such as the more sophisticated household luxuries, motor cars, electrical appliances and equipment and for establishing manufacturing plant with the required construction and machinery. Again, all this will not be bread thrown upon the waters not to return.
No one is more delighted than I am that the C.D.C. is doing so much in partnership with the developing countries. As I have said, in Nigeria it leads the way with the best hotels. In joint enterprise with Dorman Long, it has substantial interests in Nigerian housing, in both the north and the south. It provides support for the Industrial Development Bank and other major commercial interests.
I welcome the Bill, but I would remind hon. Members that we must show more

initiative and energy in capitalising on the goodwill and expanding economies resulting from our aid overseas.

9.58 p.m.

The Parliamentary Secretary to the Ministry of Overseas Development (Mr. Albert Oram): We have had a short but most useful debate on what is a short and most useful Bill. I will try to make my reply short and useful as well. If I were to attempt to reply to all the points which have been raised, I am afraid that I would detain the House longer than it would wish.
Hon. Members on both sides have been almost unanimous in their praise of the C.D.C. My hon. Friend the Member for Chislehurst (Mr. Macdonald) and my lion. Friend the Member for Oxford (Mr. Luard) sounded some critical notes, but did so only in the context of speeches which in general were welcoming the Bill. There was unanimous support for its two main proposals.
The praise which has come is the more important and valuable since in many cases hon. Members have spoken from first-hand experience of C.D.C. projects overseas. I am sure that their experience is most valuable to the House in assessing whether or not we ought to extend the powers in the way that the Bill proposes.
I want first to deal with one or two of the points made about Clause 1, which contains the main financial proposals. The hon. Member for Essex, South-East (Mr. Braine) said that the money provided through the C.D.C. gets good value in development terms. He said that it was good value not only in the overseas country where the money is invested but for Britain as well in terms of aid to overseas countries which is not costly from the balance of payments point of view. The hon. Gentleman quoted a very useful passage from the 1967 Report of the Board in illustration of that fact. I had in mind to quote it myself, but it is not now necessary. It is true, as has been illustrated—

It being Ten o'clock, the debate stood adjourned.

Ordered,
That the Proceedings on the Overseas Resources Development Bill may be entered


upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Charles Grey.]

Question again proposed, That the Bill be now read a Second time.

Mr. Oram: I was agreeing with the hon. Member for Essex, South-East that C.D.C. operations are good value for the overseas Government and in terms of our balance of payments as well. This raised a query in a number of the speeches to which we listened, namely, whether, because there was an advantage to the British balance of payments situation, it was appropriate to include C.D.C. finance in aid statistics.
I am sure that hon. Members will not wish me to go into the many sophistications about statistics on aid which were raised. However, I should make one or two points in this connection as the hon. Member for Essex, South-East raised the example of vehicles being sent overseas being included in aid, whereas private investment overseas for the construction of vehicles would not be included in aid. I accept his point, but, with respect, it was a little confusing, because we might have in mind two sets of aid statistics. The British aid statistics which my Department publishes cover the amount contributed from Budgetary sources. That is quite right. It does not include private investment for the construction of vehicles overseas, but it is included in U.N.C.T.A.D. and D.A.C. statistics. That is why the hon. Gentleman's illustration, though homely and interesting, did not add to the clarity of the discussion.
The hon. Gentleman referred to return flows not being taken account of in aid statistics. In the statistics published by my Department, though we count as aid all that goes out from Budgetary sources, we also publish in a separate table the return flows, so that it is easy to do the arithmetic, even though it may be disputed whether we are right in claiming all outgoing funds as true aid.
The introductory point of the hon. Member for Liverpool, Wavertree (Mr. Tilney) concerned the financial proposals. He raised the point, which used to be raised often in debates about the C.D.C., whether it ought to have the benefit of equity capital rather than loans, I recognise his point, but I hope that he will

recognise, as the Board does, that to some extent this problem has been overcome by the operation of the waiver of interest. If the hon. Gentleman looks at paragraph 10 of the 1967 Report, he will find the Board's expression of view on this subject. It does not accept that it meets the whole equity problem, but it recognises that it goes some way towards meeting the problem that the hon. Gentleman, and earlier the Board, had in mind.
Secondly, I should like to deal with some of the points raised about the second main proposal of the Bill to extend the territorial scope of the C.D.C.'s operations.
A number of hon. Members queried whether it was not unwise to take the whole world into the scope of the C.D.C. and they saw a danger of a loss to the Commonwealth countries. It is not the intention of the Corporation or of my right hon. Friend that these new powers will alter radically the fundamental commonwealth orientation of the Corporation or that there should be a sudden and rapid expansion into a great number of foreign countries. The approach will necessarily be cautious and any extension will need the Minister's approval.
My hon. Friend the Member for Chislehurst got this a little wrong. He thought that it was the other way round and that the Corporation could operate in these other countries unless the Minister refused his approval. In fact, he will need to give his approval positively.
One smaller point, which was raised by the hon. Member for Essex, South-East and the hon. Member for Liverpool, Wavertree was about the use of the word "Commonwealth" in foreign countries. This point is well recognised, and their suggestion of operating through a subsidiary with another name is already in the minds of those who will have to operate these powers.
The hon. Member for Dorking (Sir G. Sinclair) asked whether the waiver of interest was a matter of principle or simply an expedient to help the Corporation through a period of particularly high interest charges. Both are true. There is the principle that we wish to enable the Corporation to undertake projects which it could not otherwise do on ordinary commercial terms, but this does not exclude the fact that it is also to


provide some relief during a period when the burden of interest rates is particularly high. So I do not agree with him that it was one or the other.
Some general aid matters were raised, outside the strict scope of the Bill, but which are relevant to its background. My hon. Friend the Member for Portsmouth, West (Mr. Judd) vigorously raised the question of the volume of aid and of whether or not it was advancing in absolute terms or in proportion to the growth of the national income. He also mentioned statistics, with which I have already dealt. My hon. Friend's name is among those who will serve, if the House agrees, on the Select Committee to deal with my Ministry's affairs and I shall be very surprised if he does not raise this matter. Indeed, I shall be a little disappointed and I shall certainly not discourage him from at least raising it, although some of the answers that he gets may seem at times a little discouraging.
My hon. Friend the Member for Oxford also raised a number of general aid matters which he will not expect me to answer in detail. I assure him that the Bill does not imply a reversal of policy in respect of soft terms of aid which our Ministry brought in some years ago and has operated since. Nor is there any reversal of our policy in respect of multilateral aid. The proportion of our aid programme which is dispersed through multilateral agencies has increased over the last five years from 8 per cent. to 15 per cent. That is something which I am sure he welcomes and which I am sure hon. Members opposite welcome. I assure him that his fears are groundless.
The hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) made me a little nervous when he opened his speech by putting forward the views of his constituents. I was very glad that, in the kindest of ways, he dissociated himself from the views of his constituents. This is not the only matter on which his constituents are mistaken.

Mr. Eldon Griffiths: I do not think the hon. Member can get away with that. Far be it from any hon. Member to dissociate himself from the views of his constituents. Let us say that I take them into account.

Mr. Oram: The hon. Member took them into account, but he went on to give us a speech which we all greatly admired. He put his finger on a very important problem that all of us who favour aid worry about. That is how to get the need for aid across to our constituents. I am sure that if his constituents, my constituents, and other hon. Members' constituents read his speech they will learn a great deal about the need for aid and how their disappointment in domestic terms, say about road programmes or school programmes, which, although advancing are not advancing as fast as we would wish, is as nothing to disappointments in the vast problem of poverty with which we, the Commonwealth Development Corporation and all aid givers are attempting to wrestle.
The hon. Member tried to set me a poser by asking me to do the mental arithmetic of setting £11 million or £10 million against the effect of devaluation. I shall not attempt it here because I assure the hon. Member that the C.D.C. operates in a great variety of countries, some of which have devalued and some have not. Devaluation is 18 months behind us and an even greater statistical effort would have to be made than the one which I tried to avoid earlier in my speech.
The hon. Member for Wavertree, when talking in general aid terms, made a point about private enterprise and infrastructure. He suggested that hon. Members on this side of the House put too much faith in infrastructure as a means of attracting private enterprise to developing countries. If the infrastructure is right it is essential and it is a means of attracting private enterprise into developing countries. I agree with the hon. Gentleman that mistakes can be made, and that it is not inevitably the case that infrastructure development produces the right kind of results in terms of private enterprise. But I think that he was posing the problem in too stark a way.
I should like to conclude with one or more general observations about the work of the Commonwealth Development Corporation. To me, one of the most interesting and valuable aspects of its work is the way in which it acts in partnership with other operators in development. It


is flexibile in the methods of investment it employs. In some cases it has projects which it wholly owns on its own account, but it goes into business with a great variety of other aid and development operators in the way my right hon. Friend described in opening.
I particularly welcome, as I am sure does the hon. Member for Dorking, who referred to the need for agricultural development, the fact that in a number of interesting cases the C.D.C. acts as a partner with the International Development Association. The lending terms that I.D.A. can offer, combined with the easier terms that the C.D.C. can offer as a result of the policies that our Ministry operates, mean that they can go into projects, particularly agricultural projects, that they might not otherwise be able to enter. I shall quote the Kenya Tea Development Authority.
Perhaps even more important than that fact, that it has an interesting variety of partners as investors, is the fact that it enters into partnership with the people and Governments of the countries where it operates. Here I would give just two brief quotations from the Report of the Kenya Tea Development Authority to illustrate this. It says in paragraph 1 on page 64:
An important feature of the Kenya Tea Development Authority's Board membership is the election of growers' representatives through a three-tier structure of divisional district committees and provincial tea boards.
Later it says:
Six factories started up by the Authority are now each owned by a public company to enable the smallholders to subscribe for shares and so participate in the ownership of the factory which processes their leaf.
I am sure that this kind of drawing in of the peasants, the smallholders who are helped by the nucleus estates that the C.D.C. operates, is a most valuable feature of its work.
One could quote a similar example in Swaziland, where the C.D.C. does the central operations, the irrigation, the crop research, and running the sugar factory, which enables the smallholders surrounding that nucleus to improve their standards of agriculture and their standards of living. The C.D.C. has gone further, and is helping to set up co-operatives on both the purchasing and marketing side, and I am sure that this draws the peasants into a most helpful operation.
These, then, are some of the aspects of the work of the C.D.C. which appeal particularly to me. Other hon. Members have welcomed other aspects of the work of the Corporation. That is why I am sure that we shall all be very happy in readily giving assent to the Bill and providing the wherewithal and the powers to enable the work of the C.D.C. to be extended.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills.)

Orders of the Day — OVERSEAS RESOURCES DEVELOPMENT [MONEY]

Queen's Recomendation having been signified—

Resolved,
That, for the purposes of any Act of the present Session to raise the limits on borrowings by and advances to the Commonwealth Development Corporation and to extend the area of operation of the Corporation, it is expedient to authorise any such increase in the sums falling to be paid out of or into the Consolidated Fund or remitted in pursuance of the Overseas Resources Development Act 1959 or paid out of money provided by Parliament in pursuance of section 10(3) of the National Loans Act 1968 as is attributable to provisions of the said Act of the present Session—

(a) increasing to not more than £260 million the amount which may be outstanding at any time on sums borrowed by the Corporation otherwise than temporarily;
(b) increasing to not more than £240 million the amount which may be outstanding at any time by way of advances made to the Corporation by the Minister of Overseas Development;
(c) applying the said Act of 1959 to additional countries and territories.—[Mr. Harper.]

Orders of the Day — OVERSEAS AID

Select Committee appointed to consider the activities of the Ministry of Overseas Development and report thereon:

Committee to consist of Sixteen Members:

Sir Frederic Bennett, Mr. Bernard Braine, Mr. Henry Clark, Mr. Donald Coleman, Mr. Andrew Faulds, Mr. Tony Gardner, Mr. Philip Goodhart, Miss


Margaret Herbison, Mr. Terence L. Higgins, Mr. Frank Hooley, Mr. Frank Judd, Mr. Cranley Onslow, Mr. Laurence Pavitt, Sir George Sinclair, Mr. James Tinn, and Mr. David Winnick:

Power to send for persons, papers and records; to sit notwithstanding any adjournment

of the House; to adjourn from place to place; and to admit strangers during the examination of witnesses unless they otherwise order; and to report Minutes of Evidence from time to time:

Eight to be the Quorum of the Cornmittee.—[Mr. Harper.]

Orders of the Day — NURSES (PAY-AS-YOU-EAT SCHEME)

Motion made, and Question proposed. That this House do now adjourn.—[Mr. Harper.]

10.20 p.m.

Mr. E. S. Bishop: Although I am pleased to have the opportunity tonight to raise the situation which arises from the pay-as-you-eat scheme which is now operative in our hospitals and affects student nurses, I am sorry that such a discussion should have been considered necessary. In the past few days the Royal College of Nursing, the National Council of Nurses in the United Kingdom, and the Student Nurses Association, which is the profession's own student body, have received protests from all parts of the country after the pay-as-you-eat system became operative on 1st April.
I can summarise the situation by saying that the nurses pay-as-you-eat issue is concerned not only with currant buns, but also with current problems. It is more concerned with pie than with pie in the sky. I should say at the outset that, although there has been a general welcome for the principles of the scheme, experience so far has shown that the £106 repaid for the board and lodging charge for resident students, and the living out allowance of £66 a year for non-residents, results in many thousands of students and pupil nurses finding the allowance inadequate. In effect they have suffered a pay cut.
The nurses want adequate allowances and are entitled to them, but their income is insufficient for them to absorb the extra charges without real hardship. Few people realise that after deduction of Income Tax, National Insurance, superannuation and lodging allowance, if resident, the first-year student nurse has only £5 15s. a week, out of which she has to buy food in the hospital, pay for her shoes and stockings, which she can use on duty only, as well as having to pay for her other needs. The second-year student is only 7s. a week better off. The third-year student receives only £6 10s. a week. She has to pay £30 a year in Income Tax. No wonder the Nursing Times says

Their adolescent devotion to an ideal of service is being grossly exploited by the nation.
What do we expect from our nurses? We have to ask that question before we know what they may expect of us. There has been no change in the basic requirements since Florence Nightingale published her incomparable work on nurses called "Notes on Nursing" some 110 years ago.
She deplored the view that it requires nothing but disappointment in love or an incapacity for doing other things to turn a woman into a good nurse. She claimed then, and it is true today, that a nurse should be sober, honest, truthful, trained in the habits of punctuality, quietness, trustworthiness, personal neatness, able to manage the concerns of a large ward or establishment, trained in treating wounds and injuries, performing minor operations day and night, managing helpless patients, moving them, changing them, taking temperatures and much else. She says that these and many other principles must be constantly applied.
Today, as the House knows, the student nurse not only has to do all these things; she has to prove that she has the very rare blend of moral, spiritual, physical, intellectual and idealistic resources to match the requirements, basic since the time of Florence Nightingale, and that she also has the ability to grasp and apply the enormous advances in medicine, science and technology in a space age environment. These are the things we ask of student nurses and the nursing profession, and most would agree that we are never let down in our demands.
These are quite considerable demands to make of any human being and it is greatly to the credit of what many would agree is the first-rate set of teenagers we have today that there has been no shortage of people coming forward to train as nurses, and that the real problem so far has not been recruitment but the retention of student and pupil nurses. In the Report of the National Board for Prices and Incomes, No. 60, issued last year concerning the pay of nurses and midwives, we read that wastage is still about 34 per cent. per year. It goes on to say that there is also reason for thinking that it may be more difficult to maintain the present level of recruitment in future.
Between 1968 and 1975 the size of the relevant age group, that of girls reaching the age of 18, will show a continuous decline. To the present problem of retaining nurses there may be added the problem of attracting recruits. Paragraph 45 of the Report makes recommendations that form the basis of the Ministry N.M.C. Circular 148 which has asked employing authorities to bring the new arrangements into force. The Circular revises the present system of living-in charges and since 1st April student nurses have been asked to pay for their board and lodging separately instead of having a lump sum deducted from their pay.
The new scheme has been welcomed in principle, because the objective, and it is a good one, is to enable the student nurse to have the freedom to spend the money as she wishes. We can talk about freedom to do something only if people have enough resources to exercise that freedom. This is all very well, but the increase in pay designed to cover the costs is not sufficient to pay for charges imposed for the food in our hospitals. All over the country matrons are militant, their students are nursing grievances and in some hospitals babies are not the only ones up in arms.
The pay-as-you-eat scheme has given us food for thought everywhere. Let us look at the situation in the country. Taking my own county, Nottinghamshire, there are hospitals there needing nurses for beds which cannot be used because of a lack of staff. We recognise that in many places there has been a deterioration in some of the conditions. Miss Eve Bendall, the principal of the School of Nursing at the Hospital for Sick Children in Great Ormond Street, whose responsible leadership in publicising the shortcomings of the new scheme and the injustices of it, is appreciated, claims that a nurse eating in the hospital seven days a week will have to pay £3 for meals for which the allowance is only £1 18s. Many Members have had representations on this, and have been insistent on making representations to the Government and the Ministry on these points. These include my hon. Friend the Member for Fife, West (Mr. William Hamilton), my hon. Friend the Member for Huddersfield, West (Mr. Lomas), my

hon. Friend the Member for Halifax (Dr. Summerskill) and my hon. Friend the Member for Chesterfield (Mr. Varley). There are many others who would support my plea and who would have joined in the debate, but for the time.
My hon. Friend the Member for Chesterfield has been making representations to the Minister and the matron of the Chesterfield Royal Hospital, Miss Elizabeth Horton, whose protest was supported by my hon. Friend, claims that Britain's nurses have been sold down the river. Those are rather strong words, but to some extent they are justified. In Sheffield, some student nurses are claiming that they have to live on bread and jam for many meals. At Sutton in Surrey, officials of the St. Helier Hospital Group, where, incidentally, one of my daughters is a student nurse, have protested to the Minister that nurses could be £1 a week out of pocket and have asked for the loss to be made up.
Sister Patricia Veal, of the United Nurses Association, claims that nurses are threatening to strike. Many hon. Members will wish me to say that we deplore her irresponsible and deplorable claim that the shortage of cash is making some nurses act immorally. That is an unwarranted reflection on an honourable profession and should lead to many dissociating themselves from her views and her activities in this campaign.
Mrs. Pat Williams, secretary of the Student Nurses' Association of the Royal College of Nursing, who has led the campaign on behalf of student nurses throughout the country, claiming that nurses are being exploited and that the real problem is for the country to decide their status. This is the crux of the matter, for student nurses are really apprentices and in any industry would be paid an adequate rate for the job. There is no justification for low pay and poor conditions, even if student nurses are classified as students.
Today we have seen the headlines in the Press reflecting the views of Dame Muriel Powell, matron of St. George's Hospital, who has been adamant in leading the resistance of matrons throughout the country. She claims that student nurses working on the morning shift usually have breakfast around 6.30 and by 9.30 are often hungry as well as


thirsty and yet have to pay for tea and coffee. I understand that in a debate in another place a few days ago, Baroness Serota, Minister of State, Department of Health and Social Security, admitted that the estimated cost of meals to nurses did not cover the item of refreshment. Will a student nurse have to act inappropriately by not paying for refreshment, or will she have to pay for refreshments which, during a week of duty, will add considerably to the hardship experienced? We need clarification of this now.
Was annual leave excluded from the calculations when allowances for rebate for board and lodgings charges for annual leave have been allowed by previous agreements? Student nurses in particular depended on this help towards their holidays which they could not otherwise afford. Dame Muriel Powell says, and I agree with her, that it should not be considered irrelevant to take into account the contributions made by student nurses to superannuation, insurance and Income Tax, for they remove a large slice from the gross training allowance to all students.
I ask the Minister to investigate urgently the variation in the price of meals charged in hospitals throughout the country, for the implementation of Circular N.M.C. 148 must result in lower standards of catering, with the alternative of student nurses going without adequate meals, or suffering severe financial hardship.
Further, will he take immediate action to ensure that student nurses get at least £1 a week rise, as urged by the Royal College of Nurses? If this rise is not paid at once, we should consider backdating it to 1st April. I hope that the rumours in some of the newspapers of the possibility of their getting 10s. a week more are not true, because we ought to ensure at least £1 a week to cover the extra cost of food. I urge a review of the position of student nurses who are the main labour force of our hospitals. Without their help, and let us not forget the help of overseas students, our hospital services would collapse.
I ask my hon. Friend to consider whether the amount of time spent in the wards means that students do not get enough time for study. There are allegations

that they are often inadequately supervised with their heavy responsibilities by day and by night. If they were treated as students they would get concessions equivalent to the rise they need, and it may be better for nursing. If, however, they are workers—or apprentices—they should get the rate for the job. We cannot as a nation have it both ways.
In some ways I consider that the pay-as-you-eat crisis has spotlighted the injustices and the problems of the nursing profession, and that the whole structure needs review at all levels as recommended by the Salmon, Platt, and other reports. Pay and conditions' problems will result in restricted recruiting, which in turn will result in shortages at higher levels, even at tutor level, for some schools of nursing are kept going by using unregistered tutors.
We know that our nurses are dedicated to their task, but I often wonder why dedicated people are thought to eat and drink far less than those not so dedicated. Nurses work with religious zeal, and unless we act quickly they will recall the parable of the feeding of the five thousand. To quote St. John's Gospel, they will be thinking of the phrase:
Gather up the fragments that remain, that nothing be lost.
I believe that the words of Dame Muriel Powell today on behalf of the Association of Hospital Matrons in asking for a review of the rôle of the Whitley Council with regard to pay and conditions echoed the views of people in many parts of the country.
At all levels the staffs of hospitals have been most responsible and moderate, and I warn the Government, on behalf not only of student nurses but of the profession, of the danger of more militant leaders taking over their affairs unless reasonable and long overdue claims are met.

Mr. Kenneth Lomas: May I, on behalf of the National Union of Public Employees, which recruits many nurses, tell the House that the union has said that if any hospital authority overcharges nurses it will take the most militant action against that authority? Does my hon. Friend agree


that, rather than join breakaway unions, the best interests of the nurses would be served by their joining the appropriate trade union so that they can be adequately represented on the Whitley Council through all the trade union machinery?

Mr. Bishop: I am sure the House agrees that that is the best and only way for the nurses to rectify their grievances.
I conclude by saying that the mainspring of mercy which keeps our nurses and our hospitals ticking over with dedication and with duty will recoil with force against those who exploit them, whether by intent or by indifference. For our sakes, and for their sakes, we must not let that happen.

10.37 p.m.

The Minister of State, Department of Health and Social Security (Mr. David Ennals): I thank my hon. Friend the Member for Newark (Mr. Bishop) for having raised an issue which has caused a good deal of concern in the country and among many of his hon. Friends. I thank him, too, for raising it in a humane way, and for speaking on behalf of the nurses. I think that he deserves their thanks.
I assure my hon. Friend not only of the general sympathy of my Department for the magnificent work that is done by nurses in our hospitals, but of my own special interest. At an early stage in my life I spent three years in hospital, and I formed such an admiration for our nurses during that time that whenever I look at any issues in which their interests are involved I am inevitably biased in their favour. I endorse my hon. Friend's tributes to the work done by our nurses, and I am glad that he referred to nurses from overseas, because they make a considerable contribution to our hospital services.
My hon. Friend mentioned pay and allowances of student nurses. He will, I am sure, be aware that the second stage of the new increases came into effect only in January this year. The present dispute arises, not from the Government's refusal to agree to improve pay and conditions for nurses, but from a concession made as part of the most recent agreement. The National Board for Prices and Incomes, following a joint recommendation of the two sides of the

Nurses and Midwives Whitley Council, carried out a comprehensive review and published its report in March, 1968.
The Government accepted that the pay proposals contained in the report were consistent with incomes policy and commended them to the Whitley Council for negotiation. So far as student nurses were concerned, the effect of the recommendations on pay was that first-year student nurses received a 9 per cent. increase in their training allowances, while second- and third-year students received a 14 per cent. increase. The increases were to be paid in two stages, 4 per cent. back-dated to 1st October, 1967, and the remainder to be paid from 1st January, 1969.
At the time of a nil norm and a 3½, per cent. ceiling, both the Board and the Government recognised that exceptional treatment for nurses was called for within the terms of incomes policy.
Moreover, in addition to the increases in the training allowances, the Board recommended other substantial improvements in the pay and conditions of service of student nurses. These included the introduction of special rates of training allowance for students in general training over 25 years of age, the increase in the mental "lead" from £50 to £100 per annum for students undertaking psychiatric nurse training, and the extension to students for the first time of special duty payments for duty at night and at weekends. Previous to that, they had a real case that they were being exploited.
The Board also considered the question of residence and payments for board and lodging. It accepted that there was a case for compulsory living in for first-year student nurses, but said that the aim should be to give them, after their first year, a choice between living in and living out. It said that if there was to be a real choice, there must be a revision of the existing system of living-in charges, the objective being to give the student nurse freedom to spend her money as she wished.
This reflected the views of the Staff Side of the Whitley Council, expressed over a number of years, that a system of payment for meals as taken should replace the system of fixed annual charges. Nurses had complained in the past for a considerable time because the deduction


of an annual charge meant that, apart from rebates for certain authorised absences, they were having to pay for their meals whether or not they actually took them. When they went out to eat, or took days off, they felt they were being diddled because they had already paid for their meals. I think that they had a very good case.
As a first step to meeting the wishes of nursing staff generally, a system of pay-as-you-eat was introduced for nonresident nursing staff early in 1967 and was gradually implemented in most hospitals. It was introduced without difficulty and seemed to be generally welcomed. As it has a bearing on what I have to say later, I should explain that it was made quite clear at the time that the system was based on the provision of reasonable basic meals at the standard charges agreed by the Ancillary Staffs Council. These charges, which, of course, include an element of subsidy, amount at present to 6s. 7d. for four meals a day. In addition to the basic meals, alternative meals or snacks are provided in some hospitals at suitable charges which are determined locally.
In making its recommendations on resident student nurses, the National Board for Prices and Incomes said that a system of payment for meals as taken should be introduced for them and that in future the only charge which should continue to be deducted at source should be a combined charge for lodging and personal laundry. This charge would be relatively small, as a realistic price for meals actually taken during a normal year would amount to about £100. The Board, in fact, set the charges for lodging and personal laundry for student nurses at £50 per annum, with a reduction to £25 per annum for first-year student nurses, in recognition of the fact that they are generally compelled to live in. I might say that these recommendations were known as long ago as March, 1968, and the Whitley Council gave advance warning in a circular dated 12th December, 1968, that they proposed to make the charge, where practicable, on 1st April, 1969. In neither case, to my knowledge, was any objection raised.
The Nurses and Midwives Whitley Council, the Staff Side of which, of course, comprises organisations representative of all grades of nurses and midwives,

accepted the Board's recommendations. It also accepted the level of charges for lodging and personal laundry recommended by the Board and agreed that the previous board and lodging charge should be reduced by £106 to allow student nurses to pay for their meals as taken. It is important to realise that £106 is a net amount, because there has been some misrepresentation of the agreement by staff who claim that the £106 which the resident student nurse will have available to pay for her meals will be reduced by income tax and superannuation contributions. This is not so.
Non-resident student and pupil nurses formerly were allowed free meals on duty. The Board recommended that this privilege should be abolished. At the same time it recommended that a living-out allowance of £50 should be introduced so that second- and third-year students could have a real choice between living in and living out. The Whitley Council agreed that the figure should be £66 so as to leave a net figure of just over £50 and thus ensure that no student was worse off than under the old system of free meals on duty. The new arrangement was one of many changes made to give greater freedom to the student nurse. It is all part of the long overdue process of treating as adults these girls who have to shoulder such heavy responsibilities. I am sure it was a wise decision.
But the main problems seem to have arisen among the resident student nurses. The first is the claim that £106 is not enough. The answer is quite simple. This is the cost if hospitals supply meals at the standard charges which have been nationally negotiated. No one is saying that £106 would be enough if nurses had to pay for all their meals outside.
I mentioned earlier that when the arrangements for pay-as-you-eat for nonresident staff other than students and pupils were introduced in 1967 it was made clear that the system was based on the provision of reasonable basic meals at the standard charges agreed by the Ancillary Staffs Council. The new Whitley agreement simply extends this system to resident nurses.
In negotiating an agreement of this nature, a Whitley Council obviously has to have regard to the arrangements which are reasonable for the average nurse. This applies in particular to the average


savings which are likely to be made by a nurse through annual leave, off-duty absences of various sorts and generally through not taking every meal in the hospital every day of the week throughout the year. Four meals a day is a reasonable provision and there is no reason why student nurses should go hungry. It is possible, of course, that if a nurse is given the freedom to spend her money as she wishes, she will choose to spend less—or more—on food than she did under the fixed-charge system, but if she is to be given the choice it is a matter for her to decide.
But there does seem to be clear evidence that some hospitals are not providing basic meals at the agreed standard prices. This is the cause of the present feeling, brought to the House tonight and to the country by demonstrations and statements of one sort and another.
It really is essential that hospitals do provide meals at the standard rates. Following the recommendations of the Whitley Council, which met on Tuesday, we are writing tomorrow to hospital authorities insisting that the provision of meals at the agreed rates is an essential feature of the new arrangements and that, if meals are not being provided on this basis, they should be so provided without delay.
We do not know how many hospital authorities have yet implemented the new system of charges for meals but it seems probable that it is not more than half. The Whitley agreement operated from 1st April or as soon after as was practicable.
The Whitley Council deliberately chose the date of operation of 1st April rather than 1st January, when the new salary scales came into operation, largely in order to give plenty of notice of the introduction of the new system. The circular issued in December setting out the new rates of pay gave advance warning of the introduction of the new system. It would appear that communication at hospital level has not in all cases been as good as it might have been and that in some cases this warning was not passed on to the staff concerned. There are clear lessons to be learnt from this. Communication is an essential part of good management.
The other reason for delaying implementation was that it was realised that the first month of operation would be a particularly difficult time since the full board and lodging charge would be deducted from the pay for the last month under the old system and the nurses would have to pay for a month's meals before receiving a pay packet with deductions at the lower rate. It was thought that the difficulties on this score would be greater immediately after Christmas than at other times. In order to alleviate this particular difficulty the Health Departments authorised hospital authorities to make reasonable advances of pay for up to three months.
It is hoped that all hospital authorities which have not yet implemented the new arrangements will do so in full consultation with the staff. The importance of consultation and of salary advanced is mentioned in the letter we are sending out tomorrow. I hope that action on these points will greatly improve the situation.
One other problem that has arisen concerns the arrangements for tea or coffee served on the wards. Those of us who are regular visitors to hospital wards know that the kettle is usually on the boil, and in my view the cup that cheers is often as necessary for the nurse as for the patient. But strange as it may seem, when the Whitley Council negotiated the new agreement no account was taken of the fact that tea and coffee were supplied free to the resident nurses. This matter has been brought before the Whitley Council this week.

The Whitley Council, which met on Tuesday, reaffirmed its belief in the principles of pay-as-you-eat and was right to do so. But it is examining a number of the problems that have arisen and is meeting again on 13th May.
In the meantime, I believe that the action we are taking in seeking the immediate co-operation of the hospital authorities should go a long way to put things right. But let me add that the 'situation will not be improved if some of the absurd and sometimes shocking accusations made by so-called militants are repeated. I agree with the intervention of my hon. Friend the Member for Huddersfield, West (Mr. Lomas)—that the thought that one can best achieve one's purpose by breaking away from


the trade union which acts on one's behalf is not the way to success. It would be a pity if the nurses' cause, which is a good one, were to be prejudiced by irresponsible statements and actions.

10.45 p.m.

Mr. Lomas: I am grateful for the opportunity to say a few words on behalf of the nurses who are enrolled in my union, the National Union of Public Employees. I am glad that, from what has been said, it would appear that, from now on, nurses will not have to pay more for meals than the scale laid down by the Whitley Council Agreement. It would seem that the Department has

accepted its responsibilities to ensure the agreement is honoured. It recognises that it is responsible for the recruitment of nurses and, above all, that nursing is no longer just a calling or vocation that people went into because it was right but a profession entitled to good pay and conditions.

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at nine minutes to Eleven o'clock.